Conclusions Having reviewed the Notice of Intent to Deny the renewal license application for a home health agency, attached hereto and incorporated herein (Ex. 1), and other matters of records, the Agency for Health Care Administration ("Agency") finds and concludes as follows: By Order dated August 26, 2008, the Administrative Law Judge closed its files in the above-styled case. Petitioner filed a status report withdrawing the application for renewal oflicense on August 20, 2009, attached hereto and incorporated herein (Ex. 2). The denial of the renewal application for Petitioner home health agency is upheld and the application for license renewal has been withdrawn. Upon consideration of the foregoing, it is ORDERED that the Agency's file is hereby closed. DONE and ORDERED at Tallahassee, Leon County, Florida this ffj day of ,2009. A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDING SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN THIRTY (30) DAYS OF THE RENDITION OF THE ORDER TO BE REVIEWED. Copies furnished to: Monica L. Rodriguez Attorney for Petitioner Dresnick & Rodriguez, P.A. One Datran Center 91 South Dadeland Blvd, Suite 1610 Miami, Florida 33156 (U.S. Mail) Nelson E. Rodney Assistant General Counsel Agency for Health Care Administration 8350 NW 52nd Terrace, Suite #103 Miami, Florida 33166 (Interoffice Mail) Home Care Unit Agency for Health Care Administration' 2727 Mahan Drive, MS #34 Tallahassee, Florida 32308 (Interoffice Mail) Stuart M. Lerner Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (U.S. Mail) Jan Mills Agency for Health Care Administration 2727 Mahan Drive, Bldg #3, MS #3 Tallahassee, Florida 32308 2 (Interoffice Mail) CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true copy of the foregoing was sent to the above-named addressees by U.S. Mail, or the method designated, on thisLday of s5xpf 009. Richard Shoop. Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Building 3 Tallahassee, Florida 32308-5403 (850) 922-5873 3 CHARLIE CRIST GOVERNOR June 23, 2008 Kelly Marie Damas, Admin istrator- 1 / / ·.:;, '. TEHC LLC '- -...· , .. ' ' 3317NW10thTerrSte404 i' r:;_'.'./fl Fort Lauderdale, Fl 33309 J:.:·:>r 1.< \ ii{;;_ License Number: 204390961 Case#: 2008007748 NefltE't)iKIN1'ENT:·q,oDENY It is the decision of this Agency that the application for renewal licensure as a home health agency, for TEHC, LLC., located at 3317 NW 10th Terrace, Suite 404, Fort Lauderdale, Fl 33309, is DENIED. The basis for this action is pursuant to authority of Section 120.60 Florida Statutes (F.S.) and Section 408.815 (1), (c) and (d), F.S. which states as follows: (1) In addition to the grounds provided in authorizing statutes, grounds that may be used by the agency for denying and revoking a license ... include any of the following actions by a controlling interest: A violation of this part, authorizing statutes, or applicable rules. A demonstrated pattern of deficient performance. The home health agency did not demonstrate compliance with Chapter 400, Part III, F.S. and the state home health agency rules, Chapter 59A-8, Florida Administrative Code (F.A.C.) at the home health agency licensure survey conducted Mr..y 5 through May 8, 2008. The plan of correction due June 7, 2008 as submitted to the Agency's Field Office was not acceptable. Non compliance was found in the following areas: The home health agency failed to ensure the Director of Nursing established and conducted an on-going quality assurance _program that evaluated the effectiveness of all the provided service for consistency with professional standards and anticipated outcomes. (H 224) The pertinent statutes and rules that apply include the following: 59A-8.0095(2) (c), F.A.C. "Director of Nursing: (c) The director of nursing shall establish and conduct an ongoing quality assurance program which assures: 2727 Mahan Drive,MS#34 Tallahassee, Florida 32308 EXHIBIT j Visit AHCA Online at http://ahca.myflo rida.com 'Tehc LLC Page 2 · ·-:June 23;·2008· Case assignment and management is appropriate, adequate, and consistent with the plan of care, medical regimen and patient needs; Nursing and other services provided to the patient are coordinated, appropriate, adequate, and consistent with plans of care; All services and outcomes are completely and legibly documented, dated and signed in the clinical service record; Confidentiality of patient data is maintained; and Findings of the quality assurance program are used to improve services." The home health agency failed to ensure that the Registered Nurse (RN)provide case management for 5 of 17 nursing and therapy patients. This was evidenced by: failure to provide an assessment prior to documenting a start of care comprehensive assessment for one patient; failure to provide supervision for the Licensed Practical Nurse (LPN) in the performance of duties for two patients and failure to assure progress reports were made to the physician for patients receiving nursing services when the patient's condition changed for two patients. The pertinent statutes and rules that apply include the following: 59A-8.0095 (3) (a), F.A.C. "Registered Nurse. A registered nurse shall be currently licensed in the state, pursuant to Chapter 464, F.S., and: Be the case manager in all cases involving nursing or both nursing and therapy care. Be responsible for the clinical record for each patient receiving nursing care; and Assure that progress reports are made to the physician for patients receiving nursing services when the patient's condition changes or there are deviations from the plan of care." The home health agency failed to ensure that the RN retained full responsibility for the care given and making supervisory visits to the patient's home for 3 of 17 sampled patients as evidenced by failure to provide supervision for the LPN in the performance of duties for two patients; failure to provide supervision for the Home Health Aide (Aide) and failed to prepare a written Aide assignment/instructions for services to be provided to the patient for 3 patients. (H 231) The pertinent statutes and rules that apply include the following: 59A-8.0095 (3) (b), F.A.C., "Registered Nurse. A registered nurse may assign selected portions of patient care to licensed practical nurses and home health aides but always retains the full responsibility for the care given and for making supervisory visits to the patient's home." The home health agency failed to provide supervision for the LPN in the perfonnance of duties for 2 of 17 patients. (H 235) Tebc LLC Page 3 --+---- ----:June-23--;-2008·--------- ·-- --------- --- The pertinent statutes and rules that apply include the following: 59A-8.0095 (4) (a), F.A.C., "Licensed Practical Nurse. A licensed practical nurse shall be currently licensed in the state, pursuant to Chapter 464, F.S., and provide nursing care assigned by and under the direction of a registered nurse who provides on-site supervision as needed, based upon the severity of patients medical condition and the nurse's training and experience. Supervisory visits will be documented in patient files. Provision shall be made in agency policies and procedures for annual evaluation of the LPN's performance of duties by the registered nurse." The home health agency failed to ensure the LPN reported any changes in the patient's condition to the RN and document the changes in the patient's clinical record for 1 of 17 sampled patients. (H 236) The pertinent statutes and rules that apply include the following: 59A-8.0095 (4) (b), F.A.C., "Licensed Practical Nurse A licensed practical nurse shall: Prepare and record clinical notes for the clinical record; Report any changes in the patient's condition to the registered nurse with the reports documented in the clinical record; Provide care to the patient including the administration of treatments and medications; -------and --- , ---------------- , -------------, ------------------ -------------·· Other duties assigned by the registered nurse, pursuant to Chapter 464, F.S." The home health agency failed to ensure that the care provided followed the plan of treatment for 11 of 17 sampled patients. The home health agency also failed to ensure a verbal order obtained by a home health agency nurse was put into writing and signed by the attending physician for 1 of 17 sampled patients. (H 302) The pertinent statutes and rules that apply include the following: Section 400.487 (2) F.S., "When required by the provisions of chapter 464; part I, part III, or part V of chapter 468; or chapter 486, the attending physician, physician assistant, or advanced registered nurse practitioner, acting within his or her respective scope of practice, shall establish treatment orders for a patient who is to receive skilled care. The treatment orders must be signed by the physician, physician assistant, or advanced registered nurse practitioner before a claim for payment for the skilled services is submitted by the home health agency. If the claim is submitted to a managed care organization, the treatment orders must be signed within the time allowed under the provider agreement. The treatment orders shall be reviewed, as frequently as the patient's illness requires, by the physician, physician assistant, or advanced registered nurse practitioner in consultation with the home health agency." 'Tehc LLC Page 4 _June 2},-200&------- ----- Chapter 59A-8.0215(2), F.A.C., "Home health agency staff must follow the physician, physician assistant, or advanced registered nurse practitioner's treatment orders that are contained in the plan of care. If the orders cannot be followed and must be altered in some way, the patient's physician, physician assistant, or advanced registered nurse practitioner must be notified and must approve of the change. Any verbal changes are put in writing and signed and dated with the date of receipt by the nurse or therapist who talked with the physician, physician assistant, or advanced registered nurse practitioner's office." The home health agency failed to ensure 9 of 17 patients were advised of the payment for home health agency services before care was started and were clear about the payor source and any charges required from the patient. (H 304) The pertinent statutes and rules that apply include the following: Section 400.487 (1), F.S., "Services provided by a home health agency must be covered by an agreement between the home health agency and the patient or the patient's legal representative specifying the home health services to be provided, the rates or charges for services paid with private funds, and the sources of payment, which may include Medicare, Medicaid, private insurance, personal funds, or a combination thereof. A home health agency providing skilled care must make an assessment of the patient's needs within 48 hours after the start of services." Chapter 59A-8.020 (2), F.A.C., "At the start of services a home health agency must establish a written agreement between the agency and the patient or client or the patient's or client's legal representative, including the information described in Section 400.487(1), F.S. This written agreement must be signed and dated by a representative of the home health agency and the patient or client or the patient's or client's legal representative. A copy of the agreement must be given to the patient or client and the original must be placed in the patient's or client's file." Chapter 59A-8.020 (3), F.A.C., "The written agreement, as specified in subsection (2) above, shall serve as the home health agency's service provision plan, pursuant to Section 400.491(2), F.S., for clients who receive homemaker and companion services or home health aide services which do not require a physician, physician assistant, or advanced registered nurse practitioner's treatment order. The written agreement for these clients shall be maintained for one year after termination of services." The home health agency failed to demonstrate effective communication between interdisciplinary team members to coordinate services as outlined in the plan of care for 3 of 17 'patients and failed to ensure that 8 of 17 sampled patients received the skilled nursing services in accordance with the physician's VvTitten plan of care. (H 306) The pertinent statutes and rules that apply include the following: 'Tehc LLC Page 5 --·-- June 23, 20-08 ··· - ----- Section 400.487 (6), F.S., "Tl1e skilled care services provided by a home health agency, directly or under contract, must be supervised and coordinated in accordance with the plan of care." The home health agency failed to ensure the registered nurse completed the initial evaluation visit for 1 of 17 patients. The Director of Nursing who signed the initial evaluation visit never made a home visit to the patient. (H 307) The pertinent statutes and rules that apply include the following: 59A-8.008 (1), F.A.C.., "In cases of patients requiring only nursing, or in cases requiring nursing and physical, respiratory, occupational or speech therapy services, or nursing and dietetic and nutrition services, the agency shall provide case management by a licensed registered nurse directly employed by the agency.'' The home health agency failed to provide written notice for tenninating home health services to 1 of 3 sampled patients. There was no written notification regarding the date of termination; reason for termination or a referral to another agency with a plan for continued services prior to the termination. (H 316) The pertinent statutes and rules that apply include the following: Chapter 59A-8.020 (4), F.A.C., "When the agency terminates services for a patient or client needing continuing home health care, as determined by the patient's physician, physician assistant, or advanced registered nurse practitioner, for patients receiving care under a physician, physician assistant, or advanced registered nurse practitioner's treatment order, or as determined by the client or caregiver, for clients receiving care without a physician, physician assistant, or advanced registered nurse practitioner's treatment order, a plan must be developed and a referral made by home health agency staff to another home health agency or service provider prior to termination. The patient or client must be notified in writing of the date of termination, the reason for termination, pursuant to Section 400.491, F.S., and the plan for continued services by the agency or service provider to which the patient or client has been referred, pursuant to Section 400.497(6), F.S. This requirement does not apply to patients paying through personal funds or private insurance who default on their contract through non-payment. The home health agency should provide social work assistance to patients to help them determine their eligibility for assistance from government funded programs if their private funds have been depleted or will be depleted." The home health agency failed to develop a plan of care for 6 of 17 sampled patients that included all of the required items needed to appropriately serve patients including goals to support the physician's treatment orders, level of staff to provide the services to reach the goals, and the frequency of visits to conduct the services by appropriate home health agency staff. (H 320) Tehc LLC Page 6 -June 23, 2008 The pertinent statutes and rules that apply include the following: Section 400.487 (2). f.S., "When required by the provisions of chapter 464; part I, part III, or part V of chapter 468; or chapter 486, the attending physician, physician assistant, or advanced regis1ered nurse practitioner, acting within his or her respective scope of practice, shalJ establish treatment orders for a patient who is to receive skilled care " Chapter 59A-8.0215 (1), F.A.C., "A plan of care shall be established in consultation with the physician, physician assistant, or advanced registered nurse practitioner, pursuant to Section 400.487, F.S., and the home health agency staff who are involved in providing the care and services required to carry out the physician, physician assistant, or advanced registered nurse practitioner's treatment orders. The plan must be jncluded in the clinical record and available for review by all staff involved in providing care to the patient. The plan of care shall contain a list of individualized specific goals for each skilled discipline that provides patient care, with implementation plans addressing the level of staff who will provide care, the frequency of home visits to provide direct care and case management." The home health agency failed to demonstrate evidence that patients were informed in advance about any changes to the plan of care prior to implementation of the changes for 1 of 17 patients. (H 321) The pertinent statutes and rules that apply include the following: Chapter 59A-8.0215 (3), F.A.C., "The patient, caregiver or guardian must be informed by the home health agency personnel that: He has the right to be informed of the plan of care; He has the right to participate in the development of the plan of care; and He may have a copy of the plan if requested." The home health agency failed to maintain a clinical record in accordance with accepted professional standards for 12 of 17 patients. (H 350) The pertinent statutes and rules that apply include the following: Section 400.491 (1), F.S,, "The home health agency must maintain for each patient who receives skilled care a clinical record that includes pertinent past and current medical, nursing, social and other therapeutic information, the treatment orders, and other such information as is necessary for the safe and adequate care of the patient. When home health services are terminated, the record must show the date and reason for termination " 'Tehc LLC Page 7 June 23,-2008 The home health agency failed to include all of the required items in the discharged patient clinicai records for 3 of 3 patients. There were no tem1ination summaries as required. (H 356) The pertinent statutes and rules that apply include the following: Chapter 59A-8.022(5), F.A.C., "Clinical records must contain the following: Source ofreferral; Physician, physician assistant, or advanced registered nurse practitioner's verbal orders initiated by the physician, physician assistant, or advanced registered nurse practitioner prior to start of care and signed by the physician, physician assistant, or advanced registered nurse practitioner as required in Section 400.487(2), F.S. Assessment of the patient's needs; Statement of patient or caregiver problems; Statement of patient's and caregiver's ability to provide interim services; Identification sheet for the patient with name, address, telephone number, date of birth, sex, agency case number, caregiver, next of kin or guardian; Plan of care or service provision plan and all subsequent updates and changes; Clinical and service notes, signed and dated by the staff member providing the service which shall include: Initial assessments and progress notes with changes in the person's condition; Services rendered; Observations; Instructions to the patient and caregiver or guardian, including administration of and adverse reactions to medications; (i) Home visits to patients for supervision of staff providing services; G) Reports of case conferences; (k) Reports to physicians, physician assistants, or advanced registered nurse practitioners; (1) Termination summary including the date of first and last visit, the reason for termination of service, an evaluation of established goals at time of tennination, the condition of the patient on discharge and the disposition of the patient." The home health agency failed to submit their comprehensive emergency management plan to the local county health department for review and approval. (H 376) The pertinent statutes and rules that apply include the following: Section 400.497(8) (c), F.S. "Preparation of a comprehensive emergency management plan pursuant to s. 400.492. (c) The plan is subject to review and approval by the county health department. During its review, the county health department shall contact state and local health and medical stakeholders when necessary. The county health department shall complete its review to . Tehc LLC Page 8 - --June 23.1008 ensure that the plan is in accordance with the criteria in the Agency for Health Care Administration rules within 90 days after receipt of the plan and shall approve the plan or advise the home health agency of necessary revisions. If the home health agency fails to submit a plan or fails to submit the requested information or revisions to the county health department within 30 days after vvTitten notification from the county health department, the county health department shall notify the Agency for Health Care Administration. The agency shall notify the home health agency that its failure constitutes a deficiency, subject to a fine of $5,000 per occurrence. If the plan is not submitted, information is not provided, or revisions are not made as requested, the agency may impose the fine." Chapter 59A-8.027 (2), F.A.C., "The plan, once completed, will be forwarded electronically for approval to the contact designated by the Department of Health." Section 400.492, F.S., "Each home health agency shall prepare and maintain a comprehensive emergency management plan that is consistent with the standards adopted by national or state accreditation organizations and consistent with the local special needs plan. The plan shall be updated annually ... " Chapter 59A-8.027(3) and (4), F.S., "The agency shall review its emergency management plan on an annual basis and make any substantive changes. (4) Changes in the telephone numbers of those staff who are coordinating the agency's emergency response must be reported to the agency's county office of Emergency Management and to the local County Health Department. For agencies with multiple counties on their license, the changes must be reported to each County Health Department ap.d each county Emergency Management office. The telephone numbers must include numbers where the coordinating staff can be contacted outside of the agency's regular office hours. All home health agencies must report these changes, whether their plan has been previously reviewed or not, as defined in subsection (2) above." · The home health agency failed to renew the application for a Certificate of Exemption that authorizes the performance of waived laboratory tests. (H 390) The pertinent statutes and rules that apply include the following: Section 483.091,F.S. "Clinical laboratory license.--A person may not conduct, maintain, or operate a clinical laboratory in this state, except a laboratory that is exempt under s. 483.031, unless the clinical laboratory has obtained a license from the agency A license is valid only for the person or persons to whom it is issued and may not be sold, assigned, or transferred, voluntarily or involuntarily, and is not valid for any premises other than those for which the license is issued. 483.031 Application of part; exemptions.--This part applies to all clinical laboratories within this state, except: (1) A clinical laboratory operated by the United States Government. (2) A clinical laboratory . Tehc LLC Page 9 · - · June 23;-2008 that performs only waived tests and has received a certificate of exemption from the agency under s. 483.106. (3) A clinical laboratory operated and maintained exclusively for research and teaching purposes that do not involve patient or public health service. 483. l 06 Application for a certificate of exemption.--An application for a cenificate of exemption must be made under oath by the owner or director of a clinical laboratory that performs only waived tests as defined ins. 483.041. A certificate of exemption authorizes a clinical laboratory to perform waived tests. Laboratories maintained on separate premises and operated under the same management may apply for a single certificate of exemption or multiple certificates of exemption ... EXPLANATION OF RIGHTS Pursuant to Section 120.569, F.S., you have the right to request an administrative hearing. In order to obtain a formal proceeding before the Division of Administrative Hearings under Section 120.57(1), F.S., your request for an administrative hearing must conform to the requirements in Section 28-106.201, Florida Administrative Code (F.A.C), and must state the material facts you dispute. SEE ATTACHED ELECTION AND EXPLANATION OF RIGHTS FORMS. Anne Menard, Manager Home Care Unit cc: Agency Clerk, Mail Stop 3 Legal Intake Unit, Mail Stop 3 Arlene Mayo-David, AHCA Delray Beach Field Office Manager Track & Confirm Search Resuhs Label/Receipt Number: 7160 3901 9845 4743 6663 Status: Delivered Your item was delivered at 11:36 AM on June 26, 2008 in FORT LAUDERDALE, FL 33309. Track.& Confirm FAQs Enter Label/Receipt Number. Options Track & Confirm by email Get current event information or updates for your item sent to you or others by email. ( /,h,>) fgnns Oov'I Services .Jobs Priv11.c;y Policy Tenns_ofUse • Nation;il_&.Premier Accounts Copyright© 1999-2007 USPS. All Rights Reserved. No FEAR Act EEO Data FOIA http://trkcnfrm l .smi.usps.com/PTSintemetWeb/Inter Labellnquiry .do 7/21/2008 STATE OF FLORIDA AGENCY FOR HEALTH CARE ADMINISTRATION Agency ,i' ., :, In RE: Licensure Renewal Application of Care Admi :i: : TEHC,LLC AHCA No. 2008007748 License No. 204390961 I REQUEST FOR FORMAL HEARING The law firm of Dresnick & Rodriguez, P.A., notices its appearance as counsel for TEHC, LLC, in conjunction with the above-referenced matter. All pleadings, documents, and other communications should be provided to TEHC's counsel at the address below. TEHC disputes the allegations of fact contained in the Notice oflntent to Deny and requests that this pleading be considered a demand for a formal hearing, pursuant to Sections 120.569 and 120.57(1), Florida Statutes, and pursuant to Rule 28-106.2015,. Florida Administrative Code, before an Administrative Law Judge appointed by the Division of Administrative Hearings. In support of this Petition, TEHC states the following: The Petitioner is TEHC, TLC, 3317 NW 10th Terrace. Suite 404. Fort Lauderdale, FL 33309. TEHC's telephone number is 954-351-1895, and the facsimile number is 954-351-1820. TEHC's counsel should be contacted at the address and fax number below. TEHC disputes allegations of fact including, but not limited to, those in paragraphs 1, 6, 7, 8, 9, 11, 12, 15 and 16 of the Notice oflntent to Deny, and requests an Administrative Hearing regarding these allegations. In addition, TEHC disputes that they DRESNICK & RODRIGUEZ, P.A., ONEDATRAN CENTER, SUITE 1610, 9100 SOUTH DADELAND BOULEVARD, MIAMI, F'L 33156-7817 • (305) 670-9800 AHCA No. 2008007748 License No. 204390961 have demonstrated a pattern of deficient performance, and that the plan of correction submitted in June, 2008 was not acceptable. TEHC received the Notice oflntent to Deny on June 26, 2008. The Agency's file number in this case is 2008007748. Respectfully submitted, DRESNICK & RODRIGUEZ, P.A. Attorneys for TEHC, LLC One Datran Center 9100 South Dadeland Blvd, Suite 1610 Miami, FL 33156 Off: (305) 670-9800 Fax: (305) 670-9933 '£' Monica L. Rodriguez) Florida Bar No. 986283 2 DRESNICK & RODRIGUEZ, P.A., ONE DATRAN CENTER, SUITE 1610, 9100 SOUTH DADELAND BOULEVARD, MIAMI, FL 33156-7817 • (305) 670-9800 AHCA No. 2008007748 License No. 204390961 CERTIFICATE OF SERVICE I HEREBY CERTIFY that the original of the foregoing has been furnished by telefax and U.S. Mail on July 16, 2008 to: Nelson Rodney, Assistant General Counsel, Agency for Health Care Administration, 8350 N.W. 52nd Terrace, Suite 103, Miami, FL 33166, with a copy via telefax and U.S. Mail to Richard Shoop, Agency Clerk, 2727 Mahan Drive, Mail Stop # 3, Tallahassee, Florida 32308. '-<:;.., )...f?. .c..,...:_ Monica L. Rodriguez O ') 3 DRESNICK & RODRIGUEZ. P.A., ONEDATRAN CENTER, SUITE 1610, 9100 SOUTH DADELAND BOULEVARD, MIAMI, FL 33156-7817 • (305) 670-9800 08/20/2009 15 51 FAX 305 870 9933 ?RESN ICK & RODRIGUEZ, PA 002/003 STATE OF FLORJDA
The Issue Whether the application for certificate of need number 8391, filed by Shands Teaching Hospital and Clinics, Inc., to establish a Medicare certified home health agency in District 4 meets, on balance, the statutory and rule criteria for approval.
Findings Of Fact The Agency For Health Care Administration (AHCA) is the state agency authorized to administer the certificate of need (CON) program for health care services and facilities in the state. Shands Teaching Hospital and Clinics, Inc. (Shands) is the applicant for CON 8391 to establish a Medicare - certified home health agency in AHCA District 4. AHCA health planning District 4 includes Duval, Nassau, Baker, Clay, St. Johns, Flagler and Volusia Counties. Shands operates a 576-bed statutory teaching hospital for the University of Florida Medical School in Gainesville, four other acute care hospitals, one rehabilitation hospital, a psychiatric facility, and out- patient clinics. Shands Home Care Division has 20 licensed home health care offices in 10 of the 11 AHCA districts in Florida. It is authorized to provide Medicare-certified services in 7 of the districts. In District 4, Shands currently operates a licensed home health agency, or what is called a “private duty” agency (Shands-Jacksonville) which is Medicaid-certified. A CON is a prerequisite to Medicare certification. Shands proposes to condition its CON on the provision of 5 percent Medicaid and 2 percent indigent care. The project costs are estimated to total $24,285, of which $11,000 in capital costs are intended to purchase additional computer equipment. AHCA preliminarily denied Shand’s application because it determined that an additional Medicare certified home health agency is not needed in District 4. At the hearing, AHCA maintained that Shand’s proposal will not increase the accessibility, quality of care, efficiency, appropriateness, or adequacy of services available to Medicare recipients in District 4. AHCA has also adopted guidelines which require applicants for home health agencies to demonstrate an access problem, a payor group not being served, limited availability, and linkages with health care providers. Shands concedes that it is unable to demonstrate an access problem, that any payor group is denied service, or that home health services are not available, however, Shands has substantial linkages with other health care providers. Home health services are provided by physical, occupational, respiratory, and speech therapists, registered nurses, licensed practical nurses, home health aides and homemakers. The cost of a home health visit to the patient’s residence differs greatly depending on whether a highly skilled nurse or therapist, or a less skilled aide or homemaker provides the service. There are thirty-seven licensed and three approved home health agencies in District 4. Unlike health care services delivered in health care facilities, there are no physical capacity limitations on expansion. As demand increases, agencies hire or contract for the services of additional staff. As a practical matter, however, to avoid the time and expense of driving, home health agencies tend to serve patients in relatively close proximity to their offices. The available information shows 11 agencies with offices in Duval, 7 in Volusia, 3 in St. Johns, and 1 each in Clay and Flagler, and none in Nassau County. The offices of Shands-Jacksonville are located in southeast Duval county, near Interstates 295 and 95, on Baymeadows Road. The location is close to Clay and St. Johns Counties. Numeric Need AHCA has no rule methodology to determine the need for Medicare-certified home health agencies. The prior methodology was invalidated in Principal Nursing v. AHCA, DOAH case no. 93-5711RX, reversed in part, 650 So.2d 1113 (Fla. 1st DCA 1995). In an attempt to establish need, Shands presented its own methodology for the July 1997 planning horizon. Shands examined hospital discharges to home health care agencies, from 1994-1995, in District 4. The methodology considers the projected growth in population over 65, actual hospital discharges to home health agencies, and the most cost effective size of home health agencies. Approximately 70 percent of the hospital discharges referred for home health care were patients age 65 or older. In District 4, approximately 15 percent of the population is 65 or over, as compared to 18.7 percent statewide. The population in District 4 and statewide will grow approximately 9 percent from 1996 to 2001. However, the 65 and over population of District 4 is projected to grow by 10.82 percent, as compared to statewide projected growth of 7.36 percent for the 65 and over population. By July 1997, the projected population of District 4 is 1,514,655, of which 234,404 will be over 65. Shands also analyzed the cost effective agency size (CEAS) of home health agencies, finding the home health agencies in a range between 30,000 to 95,000 visits a year are the most cost effective, which is consistent with the average size of 46,496 visits a year for District 4 agencies. Costs for each visit to a patient are greater for smaller home health agencies, until business increases to 25,000 to 30,000 visits. After that, economies of scale allow the additional costs for each additional visit to become negligible. In large part, the costs are higher because smaller agencies have disproportionately more skilled staff, particularly nurses. Within the range of the CEAS, the proportion of visits provided by nurses and home health aids is more balanced. When agencies become very large, over 125,000 visits, each visit begins to add costs, and home health agencies begin to increase the proportion of home health aide visits. Factors which tend to increase use rates for home health agencies include all of those which are resulting in lower lengths of hospital stays, including the use of Diagnostic Related Group (DRG) categories, increased managed care, and other financial disincentives to hospitalization. Advances in medical care also have expanded the types of procedures or treatments administered in the home rather than in a hospital. Medicare-certified home health agency use rates in District 4 have consistently increased from 1.65 in 1989, to 2.18 in 1990, to 2.61 in 1991, to 3.97 in 1992, to 5.46 in 1993, and 7.01 in 1994. Shands used a blended use rate rather than assuming that the historical trend in growth will continue and, from that, projected total visits of 1,969,666 in July 1997, as compared to 1,527,000 actual visits in 1994. When divided by the mean District 4 home health agency size of 46,496 visits, the result is a need for 43 agencies in the district. After subtracting the existing 37 licensed and 3 approved agencies, Shands' expert reasonably found a need, after rounding off 2.53, for up to 3 additional home health agencies in District 4. Of the over 400,000 projected additional visits from 1994 to 1997, Shands reasonably projects 11,000 visits in year one, and 16,000 in year two, when compared to the experiences of existing providers in the District. Subsection 408.035(1)(a) - the need for health care facilities and services and hospices being proposed in relation to the applicable district plan and state health plan. The 1993 State Health Plan (SHP) includes preferences for home health agency applicants proposing to (1) serve AIDS patients, (2) provide a full range of services, including high technology services, (3) provide a disproportionate share of Medicaid and indigent care, (4) serve underserved counties, (5) use surveys to measure patient satisfaction, and (6) become JCAHO-accredited. The district health plan (DHP) includes preferences for applicants which (1) economically meet acceptable quality standards, (2) will alleviate geographic access problems, (3) will treat HIV infected patients, (4) have adequate health manpower, (5) will serve rural county residents, (6) have letters of support from other health care providers, (7) will serve areas without CON-approved agencies, (8) will locate in counties with averages of less than 4,000 home health visits per 1,000 persons 65 years or older, and (9) commit to having personnel on-call during evenings and weekends. SHP(1) and DHP(3) - AIDS/HIV positive patient care Shands provided 191 discharges for 1,514 inpatient days of care to AIDS/HIV positive patients from October 1994 through September 1995. Shands is affiliated with the Northeast Florida AIDS Network and participates in the Medicaid AIDS waiver, having qualified separately for that program. Extensive out-patient services are provided by Shands to allow AIDS patients to avoid institutionalization. All Shands nurses and home health personnel receive orientation and in-service training in the care of AIDS/HIV positive persons. SHP (2) - a full range of services, including high technology services, is needed Shands offers ventilator, intravenous or infusion, wound care, and high technology drug therapies, as well as pediatric care, which usually involves extremely high technology services. The high technology services are provided by licensed practical nurses or registered nurses, as opposed to home health care aides or homemakers. Shands also operates pharmacies to provide the drugs or equipment needed for high technology services. SHP (5) - surveys for patient satisfaction; and DHP (6) - letters of support from other health care providers and agreements with hospitals, nursing homes and other providers. Because of its existing Medicare - certified home health agencies, Shands already uses and reports to the state the results of its surveys. Shands also has agreements with doctors, hospitals and managed care organizations. Shands' application also includes the required letters of support. Subsection 408.035(1)(b) - availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospices in the service district; SHP (4)- underserved counties, DHP(2) - to alleviate geographic access problems; DHP(5) - serve rural county residents; (7) - areas without other CON - approved agencies; and (8) - counties with less than 4,000 visits per 1,000 persons 65 and over. No geographic access data is available to determine whether or not any problem exists in District 4. There is no evidence that counties in the district are underserved, although portions of Clay and Flagler Counties are rural areas. There is no evidence that any counties in District 4 have had fewer than 4,000 home health visits per 1,000 persons 65 and over. The existing supply of comparable services in District 4 can theoretically and legally expand to provide the projected 1,969,666 visits in 1997. However, competition from new providers encourages quality improvements and maintains cost-efficient agency sizes. Most Medicare-certified agencies in Jacksonville take care of only Medicare patients. Some have related entities to care for private pay or commercial insurance patients. Visiting Nurses Association (VNA) and St. Vincents in Duval County are the Medicare - certified agencies to which Shands refers patients. In 1994, VNA and St. Vincents reported 194,691 and 46,300 total visits, respectively. Subsection 408.035(1)(c) - ability of the applicant to provide quality of care and the applicant's record of providing quality of care; and SHP (6) - JCAHO accreditation. Shands Home Care agencies have received JCAHO accreditation, beginning in 1991. Shands successfully operates Medicare - certified home health agencies in AHCA Districts 3, 5, 6, 7, 8, 9 and 10. Shands-Jacksonville, which started in 1995, is currently being surveyed for JCAHO accreditation. Shands operates other home health agencies which, like Shands-Jacksonville, are not Medicare-certified in AHCA Districts 1 and 11. Shands has an extensive quality assurance and quality improvement plan. Established standards of care apply to guide personnel in the procedures to follow in providing each kind of therapy or service that Shands offers. Subsection 408.035(1)(d) - availability, adequacy alternatives to facilities or services to be provided by the applicant. Home health care is the preferable, lower cost alternative to longer acute care stays or to re-admissions caused by a lack of adequate care following an acute care hospital stay. Existing Medicare-certified home health agencies range from a low of 2,058 visits for Olsten in St. Johns County to a high of over 370,000 visits by Careone in Volusia County. The realistic alternative to Shands’ proposal is for Shands to continue referrals to Medicare- certified home health agencies, one of which exceeded the CEAS by more than 70,000 visits in 1994. Subsections 408.035(1)(e) - probable economies and improvements in service that may be derived from operation of joint, cooperative, or shared health care resources; and Subsections 408.035(1)(f) - need in the service district of applicant for special equipment and services which are not reasonably and economically accessible in adjoining areas. The parties stipulated that the criteria in Subsections 408.035(1)(e) and (f) are not at issue or not in dispute in this case. Subsection 408.035(1)(g) - need for research and educational facilities including, but not limited to, institutional training programs and community training programs for health care practitioners and for doctors of osteopathy and medicine at the student, internship, and residency training levels. As one of the six state statutory teaching hospitals, Shands meets the need for research, educational and training programs. Subsection 408.035 (1) (h) - availability of resources; including manpower, management, personnel . . . effects on clinical needs of health professional training programs . . .; accessible to schools for health professionals . . . and the extent to which proposed services will be accessible to all residents of the district; DHP 1 - economically provide acceptable quality; DHP (4) - adequate health manpower and (9) - on- call personnel. Shands Home Care has 2700 employees statewide. Shands Hospital and Shands Home Care have extensive recruitment and human resource capabilities. Fringe benefits include choices of several medical plans, dental insurance, legal insurance, and competitive vacation policies. The existing Shands-Jacksonville operates from a 1500 square foot office, with a staff of 15 employees. Up to 185 contingent staff people are available to Shands - Jacksonville. The number of hours that the contingent staff works can be adjusted to meet the demands of the agency. Shands will increase full time staff to 18 people. Shands can provide approximately $25,000 to fund the total project cost, without affecting the costs of other services provided by Shands. In 1995, Shands’ net cash flow from operations exceeded $68 million. Shands already meets and, if CON approved, can continue to meet the requirement of having personnel on-call to provide services evenings and weekends. Subsection 408.035 (1)(i) - immediate and long term financial feasibility of the proposal. The parties stipulated that the long - term financial feasibility of Shands’ proposal is not in dispute and not at issue in this proceeding. Subsection 408.035 (1)(j) - special needs and circumstances of health maintenance organizations (HMOs). Shands maintains contractual relationships with 22 HMOs statewide, 5 of which include home health care. Shands claims that its application will meet the special needs of HMO patients. Shands does not have an HMO within its organization and is not an HMO. As AHCA has interpreted the criterion, the applicant must be an HMO to quality. Subsection 408.035(1)(k) - needs and circumstances of entities which provide a substantial portion of their services or resources, or both, to individuals not residing in the service district in which the entities are located or in adjacent service districts. The parties stipulated that the criterion is not in dispute or not at issue. Subsection 408.035 (1)(l) - probable impact of the proposed project on the costs of providing health services proposed by the applicant, upon consideration of factors including, but not limited to, the effects of competition on the supply of health services being proposed and the improvements or innovations in financing and delivery of health services which foster competition and service to promote quality assurance and cost-effectiveness. Medicare reimbursement is the same for all providers of home health services, so that the approval of an additional home health agency is not expected to affect costs. AHCA takes the position that an additional provider in District 4 will shift the market shares to the new provider to the detriment of the existing home health agencies. The available evidence indicates that only Shands, VNA, and St. Lukes serve pediatric patients. In that market, Shands competes with VNA which had 194,691 visits in 1994, the largest number in Duval County. If certified for Medicare reimbursement, Shands will also primarily compete with VNA, and additionally, St. Vincents. The methodology previously used by AHCA to determine the numeric need for home health agencies was an invalid rule because it was anti-competitive and failed to consider cost efficiency. The methodology used by Shands takes those factors into consideration, and demonstrates that an additional home health agency will foster competition and cost-efficiency in District 4. Subsection 408.035 (1)(m) - costs and methods of proposed construction including costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction. The parties stipulated that the criterion is not in dispute or not at issue in this proceeding. 408.035(1)(n) - proposed provision of health care services to Medicaid patients and medically indigent; and SHP (3) - disproportionate share Medicaid and indigent care. Shands is a disproportionate share Medicaid provider and proposes a commitment to provide 5 percent Medicaid and 2 percent indigent care. In 1994 and 1995, Shands provided approximately $27 million and $28 million, respectively, in charity care. Shands Home Care provided approximately 20 percent Medicaid in 1994, 27 percent in 1995, and 27 percent through March of 1996. 408.035(1)(o) - applicants past and proposed provision of services which promote a continuum of care in a multilevel health care system, which may include, but is not limited to, acute care, skilled nursing care, home health care, and assisted living facilities. Shands is a multi-level provider, with a range of services from virtually every tertiary service, such as open heart surgery, bone marrow, and organ transplantations to out-patient clinics. In addition to the Gainesville teaching hospital, Shands also operates 422-bed Alachua General Hospital, 83-bed Upreach Rehabilitation Hospital, and 40-bed Vista Pavilion in Gainesville, and 54-bed Bradford Hospital in Starke, 128-bed Lake Shore Hospital in Lake City, and 30-bed Suwannee Hospital in Live Oak. The continuum of care is enhanced by the use of “clinical pathways” which direct the plan of care through an illness from inpatient to rehabilitative to home care. It provides an effective communications tool for the health care providers in each setting. Shands resources include a large statutory teaching hospital, acute care community hospitals, psychiatric and rehabilitation facilities. The continuum of care is enhanced by allowing Medicare patients discharged from the hospitals to District 4 agencies to receive follow- up home health care within the same system. Shands- Jacksonville has an integrated system for health care personnel to care for Medicaid, HMO, or private pay patients. That same group will care for Medicare patients while maintaining its Medicaid and indigent commitment. Subsections 408.035(2) and (3) - construction of new inpatient facilities and CONs prior to 1984 Based on the parties' stipulation, Subsections 408.035 (2) and (3) are not applicable or not in dispute in this proceeding. Agency consistency and rule-making In the preceding batching cycle, AHCA recommended approval of two additional home health agencies in District AHCA rated both of those as completely or partially complying with fewer review criteria, and as not complying with more review criteria than the Shands application in this cycle. The guidelines established by AHCA which require an applicant to demonstrate existing problems with access to and a lack of available home health services are given no independent weight in evaluating the application, having not been adopted by rule. The issues are considered to the extent that accessibility and availability are included in the applicable statutory review criteria. On balance, Shands meets the criteria for approval of its CON to provide home health care to Medicare recipients in District 4.
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 issuing CON 8391 to Shands Teaching Hospital and Clinics, Inc., to establish a Medicare-certified home health agency in AHCA District 4 conditioned on providing 5 percent of total annual gross revenues by payor to Medicaid patients and 2 percent to indigent care. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 20th day of March, 1997. ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 20th day of March, 1997. COPIES FURNISHED: Moses E. Williams, Esquire Agency For Health Care Administration Office of the General Counsel 2727 Mahan Drive Tallahassee, Florida 32308 James M. Barclay, Esquire Cobb, Cole and Bell 131 North Gadsden Street Tallahassee, Florida 32301 Sam Power, Agency Clerk Agency For Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308 Jerome W. Hoffman, General Counsel Agency For Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308
The Issue The issues concern the question of the entitlement of Petitioner to the grant of a certificate of need (CON) to provide home health services in District III.
Findings Of Fact On December 15, 1986, Petitioner made application for a certificate of need (CON) to provide home health services in Citrus County, Florida. That application was denied by Respondent on December 14, 1987. The basis for denial as set out in Respondent's State Agency Action Report (SAAR) was to the effect that there was no demonstrated need when resort was made to the methodology suggested by the North Central Florida Health Planning Council in its 1986 District III Health Plan. (At that time Respondent did not have a methodology for determining need). It was felt that some advantage might be gained in serving the needs of underserved groups; however, there was limited information to demonstrate that existing home health agencies in the county could not meet the demands for service. Finally, it was stated that the referral agreement between Petitioner, as a source of clients from its hospital operation, and Intervenor as an existing home health care provider, to include use of Petitioner's employees in the provision of care, care which was as "hi-tech", as Petitioner could provide, was sufficient. Following the application denial, Petitioner filed a timely request for formal hearing under the authority set forth in Section 120.57(1), Florida Statutes. On February 17, 1988, Intervenor was allowed to intervene. Given that the Respondent did not have a rule methodology in place to consider this application when first filed or at the point in time where the case was referred to the Division of Administrative Hearings for consideration, on May 12, 1988, Respondent moved, unopposed, to have the case returned to the agency to await the promulgation of a new home health rule. The motion was granted. On September 12, 1988, the new rule became effective as Rule 10- 5.011(1)(d), Florida Administrative Code. Which provided as follows: (d) Medicare Certified Home Health Agencies. Definitions. Home Health Agency. A home health agency is defined as a Medicare certified home health agency in accordance with subsection 381.702(10), F.S. Home Health Services. Home Health Services are defined in accordance with subsection 400.462(3), F.S. Home Health Services Provider. For the purpose of this rule, a home health services provider is defined as the person or corporate entity to which the certificate of need or license is issued. District. District means a service district of the department as established in subsection 20.19(5), F.S. Service Area. A certificate of need for the establishment of a home health agency shall authorize a home health services provider to locate a home health agency and serve persons anywhere within the district for which the certificate of need is awarded. Planning Horizon. The planning horizon is the anticipated time frame within which the agency is expected to be licensed. The planning horizon for applications submitted between January 1 and June 30 of each year, shall be July of the following year; the planning horizon for applications submitted between July 1 and December 31 of each year shall be January of the year following the year subsequent to the application deadline. Approved Home Health Agency. For the purpose of this rule, an approved home health agency is defined as a new agency within the district which holds a valid certificate of need and has not been licensed by the department one moth prior to the publication date of the semi-annual fixed need pool. Persons or corporations who do not operate Medicare certified home health agency in the district and are the holder of one or more certificate of need approvals within the same district, shall only be counted as one approval. Persons or corporations who do operate a Medicare certified home health agency in the district and are also the holder of a certificate of need approval for the same district, shall not be counted in the inventory of approved agencies. Quality of Care. Home health agencies regulated under this rule shall meet the minimum of care standards contained in HRS rules 10D-68, F.A.C. Need Methodology. The establishment of a home health agency by a provider who does not currently operate a Medicare certified home health agency in a district, shall require a certificate of need for the operation of a Medicare certified home health agency in the district. Applications for home health agencies shall be reviewed against all applicable statutory and related rule criteria. Applications for home health agencies shall not normally be approved unless a need is indicated in accordance with the formula under paragraph 3. The establishment of additional Medicare certified home health agencies, additional offices, mail drops, or any other physical presence by a Medicare certified home health services provider within the same district is not subject to a certificate of need. The need for the establishment of a new home health agency within the HRS district shall be determined twice a year. The net need for new Medicare home health agencies in each HRS district is calculated as follows: HHNN = ((PHHV - AHHV)/CEAS) - AHH Where: HHNN equals the Medicare certified home health agency net need. PHHV equals the projected number of home health agency visits for the respective district and planning horizon. The projected number of home health agency visits is calculated by multiplying the number of home health visits per 1000 population 65 years and over provided by the Medicare certified agencies in the district for the most recent year for which data available, by the projected population 65 years and over for the respective district. The population projections shall be based on the population projects issued by the Executive Office of the Governor available to the department 1 month prior to the publication date of the semi- annual fixed pool. AHHV equals the actual number of home health agency visits provided by all Medicare certified home health agencies in the district based on cost report data obtained from Medicare Intermediaries for the most recent year available to the department 1 month prior to the publication date of the semi-annual fixed need pool as specified in Rule 10-5.008(2), F.A.C. CEAS is the cost efficient agency size in numbers of visits at which economy of scale is achieved according to the data available to the department. If the fraction (PHHV - AHHV)/CEAS is .5 or exceeds .5, the fraction shall be rounded upward to the nearest whole number. CEAS shall be updated by the department annually and shall be determined by the department according to the following methodology: Rank all agencies by visit size, excluding hospital-based agencies. calculate the average cost for all visits for each remaining agency. Calculate the mean visit cost for all agencies, excluding hospital-based agencies, and two standard deviations from the mean for the remaining agencies. Eliminate agencies with average visit costs at or exceeding two standard deviations above and below the mean visit cost from further calculations. Array remaining agencies by visit size from low to high, and sort agencies into 4 groupings by visit size containing an equal or similar number of agencies, and calculate the mean cost for each groupings. Calculate the percentage reduction, if any, in mean visit cost for each grouping as compared to the previous grouping. Identify the agency size groupings which have a mean visit cost reduction of 5 percent or more compared to the mean visit cost of the previous groupings. Select the agency size grouping for which the last 5 percent or more reduction in mean visit cost is achieved prior to a grouping for which a less than 5 percent reduction is achieved as compared to the previous grouping and determine the median agency size for this grouping rounded to the nearest thousand. This agency size is defined as CEAS. AHH equals the number of approved home health agencies in the district. Preference shall be given to applicants proposing to provide home health care services to indigent persons and Medicaid patients. Preference shall be given to applicants proposing a comprehensive range of home health services if it is determined by the department that certain types of services are unavailable or that there is a shortage of certain types of home health service. Preference shall be given to applicants proposing to provide home health services and establish a physical presence underserved areas of the district. Data Reporting Requirements. Home health agencies regulated under this rule shall provide the following information to the department or its designee. The information shall be provided for the same reporting period covered by the annual cost reports submitted to the Medicare Intermediaries, and shall be submitted to the department or its designee at the same time the annual cost report is submitted to the Medicare Intermediary. The total number of patients served less than 65 years of age and 65 years of age and over by county of residence. The total number of visits provided by type of service. The total number of patients served by payment source including Medicaid, Medicare, and uncompensated care. As can be seen, this rule considers the need question district-wide as opposed to a county-by-county analysis in effect at the time of application by Petitioner. District III, which contains Citrus County, has fifteen other counties. The rule in its text is not found to be applicable per se to this application, although its underlying concepts arguably have an influence on the case outcome. While the Petitioner and Respondent urge that the rule does-have retroactive effect and the Intervenor disagrees, all parties acknowledge the logistical awkwardness of trying to employ the rule's terms in a literal sense. In fact, the rule cannot be used as it is written, for reasons to be explained and in any event neither of the proponents have exercised its terms in exact detail. When Respondent reviewed the application using a modified version of the new rule in the interest of what Respondent believed to be an equitable treatment of pending home health applicants who had waited for the rule to be enacted, it changed its position from one of recommended denial to recommended grant of the CON. The case was returned to the Division of Administrative Hearings and upon motion by the Intervenor, as granted, the Petitioner updated its application on December 5, 1988. This lead to the hearing on the dates previously described The updated information was provided to the other parties in this case. It was not given to the local health council for further review by that organization. Petitioner is a public not-for-profit healthcare organization created by state law. The hospital is governed by a Board of Trustees appointed by the Governor of the State of Florida. The proposed home health agency would be owned and operated by Petitioner. It treats indigent and Medicaid patients and other medically underserved groups. The hospital's mission is to serve the residents of the community regardless of their ability to pay. This approach would be continued in home health care. Petitioner provides high quality patient care and this could be expected to continue if a CON for home health care was granted. The quality assurance plan and mechanisms in place at Petitioner's hospital would be used in its home health agency to help assure high quality patient care. Petitioner would also develop a utilization review plan similar to what is in effect at the hospital that would help insure proper utilization of the home health agency. Petitioner is JCAH accredited and licensed by the State of Florida, and is currently in compliance with all State of Florida licensure requirements. Petitioner's home health agency would be a hospital-based home health agency, as opposed to a free-standing home health agency. There are benefits to being a hospital-based home health agency. The home health agency employees have the advantage of being part of the hospital's employment benefit package; the home health agency has the ability to tap into the expertise of the hospital in such areas as accounting, data processing, and so forth; discharge planning is easy to coordinate; and, the home health agency has the potential ability to use trained hospital personnel who have high tech skills and expertise and can provide services to the home health agency in their area of expertise. However, the suggestion that employees would be involved in both roles of hospital care and home health care is suspect in that certain employees such as nursing staff are not expected to fulfil that dual role and other employees such as the dietician were unable to consistently aid the patient in the home and carry out the duties in the hospital under an arrangement by which the Intervenor per agreement with the Petitioner sought to have continuation of services from the hospital to the home. If this could not be done, given the demands on the dietician in the hospital duties at that time, then there is no reason to believe that it would be any easier to achieve if the hospital had a home health agency. None of the aforementioned benefits are significant improvements over existing conditions in Citrus County where home health care is provided by freestanding agencies. More specifically, Petitioner currently has physical therapists, respiratory therapists, dietitians, and social workers on its full-time paid staff that could conceivably be available to the home health agency. Since these persons are already full-time salaried employees of the hospital, it would not cost the home health agency any additional amount for these skilled persons to provide services to home health care patients, assuming the ability to meet the needs of hospital patients and home health care patients, again a real uncertainty. Petitioner's personnel would be available to assist in the development of policy and procedure manuals, quality assurance plan and utilization review plan for the home health agency. There are other possible economies in service that could be derived from Petitioner's operation of a hospital-based home health agency. These include: the hospital-based agency is easily accessible to physicians; discharge planning is facilitated due to the close cooperation of nursing, social worker, and home care provider while the patient is still in the hospital; services will be available 24-hours a day through the use of hospital switchboard and communications systems; and use of current medical records systems will mean a patient's entire medical history will be available to practitioners. Again, these arrangements do not afford a significant improvement over existing home health services. Petitioner has sufficient resources available to initiate and operate a hospital-based home health agency. Necessary staff can be employed to the extent they are not already working at the hospital. Petitioner is in sound financial condition. Petitioner would be able to hire a qualified administrator. Petitioner's projected payor mix of 88% Medicare, 3% Medicaid, 4% insurance and 5% indigent, is an admirable goal. However, there is some question about whether the projections of Medicare and indigent care levels of service will be achieved. Petitioner as a referral source from its hospital operations had not achieved those projected levels of referrals in the past. This is important because Petitioner expects to obtain its home health patients from the hospital referrals. Consequently to promote the grant of the CON premised solely upon the belief that underserved groups will be better off would not be warranted. The possibility exists that with greater awareness more underserved persons might be referred for home health care but nothing in this case points to any increased effort to publicize the availability of home health for the underserved to justify the optimistic levels the applicant predicts. In a home health agency, all of the patient services are provided in the patient home. Thus, the only space requirement is for office space for the administrative staff and working space for the employees to do their necessary paperwork. Petitioner Memorial Hospital has about 1,600 square feet of vacant space available in which to house the home health agency offices. This building is currently owned by Petitioner. There is no debt associated with this building, and the building has been fully depreciated. Contrary to the statement in its application, Petitioner has decided not to offer prescription delivery services. This is not a significant change. Intervenor is a licensed home health agency in Citrus County. It first became licensed by the State of Florida in February, 1986. Intervenor has been surveyed annually by Respondent since 1986. In each of these surveys, it received no deficiencies. Intervenor is a full-service home health agency. It offers a range of "hi-tech" home health services, including: skilled nursing services; physical therapy; occupational therapy; speech therapy; social services; home health aide services; dietary guidance; medical supplies; home IV therapy; parenteral nutrition; interostomal therapy; home phlebotomy and lab testing services; and respiratory care. It has offered these services since its inception. Intervenor provides some homemaker services during home health aide visits, such as cleaning, straightening, and laundry. Intervenor's personnel include registered nurses, certified home health aides, physician therapists, licensed physical therapist assistants, speech therapists, occupational therapists, a medical social worker who holds a masters in social work, interstomal therapists, nutritionists, and respiratory therapists. Intervenor offers quality of care and ensures continuity of care in the delivery of home health services. Petitioner has never complained that a patient could not be discharged quickly enough due to Intervenor's shortcomings in taking on home health services for the discharged patient. Intervenor makes every effort to coordinate its operations with Petitioner to ensure quality and continuity of care related to patients referred by the hospital. The service area of Intervenor is Citrus County. Until late 1988, about 70% of Intervenor's referrals came directly from Petitioner. On average, Intervenor provides about 28.6 home health visits per patient. Intervenor provides home health services to all patients regardless of ability to pay. Intervenor provides home health services to the following payor classes: Medicare, Medicaid, VA, workmen's compensation, private insurance, and indigent. Its CON contemplates 2% Medicaid and 3% indigent patients. Since opening in 1989, Intervenor has treated 985 patients. Of these 985 patients, only ten (10) have been indigent and fifteen (15) have been Medicaid patients. This works out to one percent (1%) indigent care and one and one half percent (1.5%) Medicaid care. Community Care publishes a brochure that advertises its services to the community. Nowhere in this brochure does it indicate that Community Care serves indigent patients. The brochure stresses that services will be provided through reimbursed coverage, either Medicare, insurance, or other reimbursement sources. On the other hand it does not require any deposit or up-front payment from new home health patients and has never refused a patient due to an inability to pay. As stated until recently a very substantial portion of the Intervenor's referrals came from Petitioner and levels of service to the underserved, that is, Medicaid and indigent, have been low. This ties back to the observation that the 3% Medicaid and 5% indigent projection of service made by Petitioner may not be any easier to achieve and probably less so than the 2% Medicaid and 3% indigent which Intervenor is committed to. This is supported by the fact that on the first 11 months in 1988, Petitioner referred less than 2% Medicaid and 1% indigent. Moreover, the District III average for existing agencies of services to these underserved groups is .8% Medicaid and 1.3% indigent. As alluded to before, in December, 1985, Petitioner and Intervenor entered into an agreement. Per that agreement, Petitioner would refer all home health patients to Intervenor unless a patient or physician specifically requested otherwise. The agreement provided that Petitioner would provide certain services and personnel to Intervenor in exchange for compensation. It was a two-year agreement with an automatic one-year renewal. Petitioner chose to extend the contract for three years through the latter part of 1988. Since late 1988, Petitioner rotates its hospital referrals in the instance where the patient, patient's family or physician did not specify which home health agency was preferred. This means that as many as seven agencies could be involved in the rotation if Petitioner gained a CON, with Petitioner having no greater share than the rest. At present, there are four providers, two in the rotation are from the ABC home health group, the Intervenor and Upjohn another home health provider. Petitioner would make five. To make seven, VNA and Gulf Coast Home Health Services who have come into Citrus County would be added. VNA is another provider with a history of service to underserved patients. In this connection, Petitioner argues that its equal treatment of existing providers and itself, if granted a CON, minimizes the adverse impact of another competitor arriving on the scene and allows existing providers who are for profit agencies to remain financially viable. This together with trends toward early release in DRG for the hospital inpatient sector; provision of home health care through the Catastrophic Healthcare Act, and the general trend in increased home health visits in Citrus County make it possible for both the existing providers and the Petitioner to survive in the market place, if you accept the point of view of those who favor the grant of a CON to Petitioner. In fact, the DRG situation and the Catastrophic Healthcare Act, as events, are too speculative to say what their influence will be in promoting greater use of home health services. Otherwise, the trend toward increased visits that have been pointed out are now being met with an increased number of providers to deliver those visits. This dilutes market share. The Petitioner's rotation system further dilutes market share, especially as to the Intervenor. Thus, the question is raised on the matter of whether the historical trend toward increased visits is enough to sustain the existing providers with the advent of the Petitioner's presence and choice to rotate referrals. On the whole, the Petitioner's influence on competition is not positive and is not acceptable. The Petitioner's projections concerning its own market acceptance are unrealistic and unacceptable. The projections in the original application and in the December 5, 1988 update to that application as to skilled visits per patient far exceed the experience in the service area, Citrus County. The applicant speaks in terms of 53 visits when the historical experience in the county is approximately 30. Nothing in the record of the hearing tends to support the idea that Petitioner can deliver such an excessive increase in visits. Additionally, estimates of total home health visits in the first two years of operation are generally out of line. The estimate by Petitioner ranges as high as 42,000, plus visits. Some of the items in that count are not comparable to referrals made out of the hospital at present. Examples of this incomparability are homemaker services, DME and the category listed as general items. Again, prescription service is no longer proposed thereby reducing the numbers. Nonetheless, the estimate is still excessive. This is made the more apparent when taking in account that by annualizing available data 464 patients were referred by Petitioner in 1988. In examining what had been referred out in 1988 in number of patients, the number of visits on average by history and the idea of rotation of referrals, Petitioner cannot achieve the performance level it predicts. Moreover, projections for population in 1990 and 1991, the furtherest years out given by Petitioner in support of its application, don't change this impression because the increases in population will not justify the Petitioner's projections on market share as a function of number of visits. The estimates of visits at 1990 and 1991 based upon 50% retention of referrals projected from Petitioner's hospital for home health services is unrealistic in that retention could be as low as 15% to 20%. Therefore, visits would be much less than 5,693 and 7,950 in 1990 and 1991, respectively. (See Petitioner's Exhibit 22.) The failing in the estimate of performance level means that the revenue projections are inaccurate. Although Petitioner is a not for profit institution, its proposed home health operation is not seen to be financially feasible in the short term or long view. The fact that approximately 80% of costs in a home health operation are variable and that home health delivery is cost-based reimbursed does not relieve the Petitioner from giving a more realistic estimate of those costs, its performance and net financial position. The effect of this failing leaves the record unclear and the trier of fact unconvinced concerning the true facts about this project's financial feasibility. The pro formas as written do not identify employee benefits ranging in costs from 25% to 30%. Transportation costs are not reflected. If other facts were favorable to Petitioner, there would be very little additional costs associated with the start-up of its operation. Only minor "sprucing up" would be necessary before occupying existing space. Excess office furniture is currently available at the hospital. The addition of Petitioner as a provider of home health services will not significantly advance variety or quality of care sufficient to justify the issuance of a CON. At present, existing providers offer a wide variety of home health services and provide quality care. The fact that the Petitioner is a hospital based not for profit institution, does not alter these findings. The addition of Petitioner promotes no positive influence in competition in the market place. The risk is presented that overall cost in the health care system can be increased if the Petitioner is added and the market place becomes overburdened. Based upon past experience, the Intervenor needs to achieve around 8,700 visits a year to be financially viable, and to break even. Petitioner's proposal together with other competitors in the market, some recently arrived, Upjohn, VNA and Gulf Coast Home Health Services jeopardize the ability to remain financially viable. Nothing can be done about the other competitors, but the issue of Petitioner's presence can be dealt with and should be rejected as an outcome. At a minimum the addition of Petitioner does not foster cost containment in that it could cause the existing providers to up requests for reimbursement nearer the caps in the Medicare segment at public expense. While there is a need for homemaker services in Citrus County, that fact doesn't justify the grant of a CON to Petitioner because it is willing to provide them. In home health care delivery there is credible evidence that initial economies of scale occur between 6,000 to 9,000 visits per annum. There is a serious question about the Petitioner's ability to achieve that level of performance under the facts found previously. When initially reviewing the compliance of the application with the 1986 District III Health Plan, in addition to problems of compliance with the need methodology in that plan, Petitioner did not respond to the need for home health services in Hamilton County and expansion of the range of services in Columbia and Suwannee Counties. These counties are within District III. These latter items concerning the other counties do not hinder the Petitioner's attempt to gain a CON because at present the decision to grant or deny a CON is on a district-wide and not county-by-county basis. Therefore, in theory, the Petitioner could serve Hamilton, Columbia and Suwannee Counties. Admittedly, that is unlikely given the proximity of these counties to Citrus County. More importantly, there has been no showing that some other applicant entitled to comparative review with the Petitioner sought to serve the other three counties putting into effect the local planning guidelines on priorities for grant of a CON. Likewise the local planning council methodology is of no moment. It deals with a county-wide analysis, not a district-wide analysis of need. The district-wide concept applies in this case per the change in the method of assessment that was fostered by the agreement to wait for the Respondent to enact a rule methodology and with that delay the tacit acceptance of the idea that approved and licensed home health providers could expand their services throughout the district. By contrast the fact that the local council reported that 148% of need was being met in Citrus County is telling and works against Petitioner. Finally, the support of the application by the local council as advisor to the Respondent is noteworthy but cannot overturn the adverse facts in this hearing which cause the application to be rejected. Petitioner is basically in compliance with the Florida State Health Plan in effect at the time of application except for the question of whether the Petitioner can achieve the aforementioned economies of scale at 6,000 to 9,000 visits per annum and the possible adverse influence on existing providers in maintaining economies of scale. Rule 10-5.0111(1)(d), Florida Administrative Code, supra, is the product of a considerable effort by Respondent to establish a balanced method of measuring the need for additional home health care providers in the various districts throughout the state. Unfortunately, it has limited utility in trying to resolve this controversy. The proponents of the use of the rule point out that nothing in the rule states that it cannot be applied retroactively to the case facts. Intervenor reminds us that nothing says it can be applied in that way. As hinted before, the rule cannot be seen to apply retroactively as it is written to render a defensible projection of need at the theoretical planning horizon of January, 1988. First, the service area in December, 1986 through January, 1988 was in reality Citrus County, not the district. There is no way to postulate who might have taken advantage of the opportunity to serve the overall district and come into Citrus County from outlying counties within the district because that was not allowed as a matter of right back then as it is now in the terms of the rule. The present situation has shown that there is such interest in coming into Citrus County with the addition of Upjohn, VNA and Gulf Coast Home Health Services. Next, the idea of who would have been shown as approved as a home health agency taking into account the January, 1988 planning horizon cannot reasonably be ascertained. The annual fixed need pool publication did not occur such that one could see who had been approved, or held a CON, one month prior to that publication to serve the district. Although one could argue that the identification of the pool can be hypothetically set for the fall of 1986, problems with identifying the 1985 data to establish that pool based upon information that was available to the Respondent at the time to announce the pool or availability of a complete data set about 1985 at the point of hearing persist. Associated with this dilemma is the influence agency expansions into other counties would have on calculation of CEAS. In the area of CEAS the exact nature of that situation cannot be ascertained. It cannot because one doesn't know which existing providers might have determined to go out of the counties in which they had offered their services and into other counties to open new units. This would have some influence on the average agency size within the district, which in turn causes a possible different answer in deriving the number of needed providers by the use of the formula. All this makes the exercise of accurately setting the pool unlikely and it wasn't done in this hearing. In using the district-wide service analysis back in time to fit the Petitioner's situation, an application by VNA in District III, Alachua County, pending and denied in December, 1987, the same month as Petitioner's denial, was not comparatively reviewed with the Petitioner as the law would theoretically require. VNA was subsequently approved and is functioning now. Consequently, comparative review is no longer possible. On the topic of the 1985 data, which is mandated in exercising the rule, what data in this category was available in the fall of 1986 is uncertain. The data about 1985 presently held by the Respondent is incomplete. This incompleteness is in AHAV where visits in all categories cannot be shown for 1985. This tends to understate what the formula derives as an answer. The derived answer for needed agencies is .7, rounded up per terms in the rule is one agency if the other factors that were described are ignored. They should not be. Especially, compelling is the existence of VNA, Alachua County which could use up the net need of one agency. Concerning the applicants who waited for the Respondent to enact a rule who applied for a CON in the period June, 1985 through December, 1987, the Respondent modified the use of the rule. In its thinking to make certain that no applicant along that time continuum was treated unfairly, Respondent picked 1986 data and a July, 1988 planning horizon in deciding the question of need. The result in the Petitioner's case was to use inappropriate data and an inappropriate planning horizon, according to the rule. This produced an answer of 1.1 agencies rounded down to 1. This is the same answer as before and no purpose is served in criticizing the Respondent's choice to deviate from the terms of the rule. On balance the concept of this rule as opposed to the ability to use the rule per se may look appealing as an abstraction, but it is unappealing as a means to resolve the factual dispute. It superimposes a system of district review at a time of county level service. For that reason, it cannot answer the riddle of how many providers would have exercised the right to serve Citrus County from other counties in the district as they have begun to do when the rule took effect in September, 1988. Using the rule retroactively anticipates a planning horizon which is already past. In recognition of this anomaly the parties have spoken to the future in their proof through the years 1990 and 1991. This has been necessitated by the agreement to wait for the Respondent to enact a new home health rule. That future is not conducive to the grant of the CON on the facts in this case which are more instructive about the true need in the district than the exercise of the formula in some past period. Had the Petitioner chosen to reapply and fallen under the clear terms of the rule, the result might be different. It did not, and it must accept the results of that choice.
Recommendation Based upon a consideration of facts found in the conclusions of law reached, it is, RECOMMENDED: That a final order be entered which denies the request for Certificate of Need as applied for by Petitioner. DONE AND ENTERED this 29th day of June, 1989, in Tallahassee, Leon County, Florida. COPIES FURNISHED: Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Stephen K. Boone, Esquire Boone, Boone, Klingbell Boone & Roberts, P.A. 1001 Avenida Del Circo P. O. Box 1596 Venice, Florida 34284 Stephen M. Presnell, Esquire Macfarlane, Ferguson, Allison & Kelly Post Office Box 82 Tallahassee, Florida 32302 James C. Hauser, Esquire Joy Heath Thomas, Esquire Messer, Vickers, Caparello, French & Madsen, P.A. O. Box 1876 Tallahassee, Florida 32302 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 29th day of June, 1989. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 88-0386 The following discussion is given concerning the proposed facts of the parties. Petitioner's Proposed Finding of Facts The first paragraph and the first sentence to the second paragraph are subordinate to facts found. The remaining sentences within paragraph 2 are not necessary to the resolution of dispute. Paragraph 3 is contrary to facts found. Paragraphs 4-7 are subordinate to facts found with exception the last sentence in paragraph 7 which is contrary to facts found. Paragraph 8 is subordinate to facts found. Paragraph 9 may express the statement of policy by the Respondent, but it is not an acceptable outcome in this instance. Paragraphs 10-12 are subordinate to facts found. Paragraph 13 is an accurate portrayal of the facts as far as its goes; however, it does not account for the problems of imposing the new home health rule over the time period associated with the filing date in this application. Paragraphs 14-16 are subordinate to facts found. Paragraph 17 is contrary to facts found. Paragraph 18 is subordinate to facts found. Paragraph 19 is not necessary to resolution of dispute. Paragraph 20 in all sentences except the latter is subordinate to facts found. The latter sentence is not necessary to the resolution of dispute. Paragraph 21 is subordinate to facts found. Paragraph 22 is contrary to facts found. Paragraph 23 is subordinate to facts found. Paragraph 24 is contrary to facts found. Paragraph 25 is true in that at the time the local health council examined the application there was an indicated need for home health for Medicare and indigent patients. That need is being met at present to the extent that those classes of patients have been made aware of the existence of the home health services. Paragraph 26 is subordinate to facts found. Paragraphs 27 and 28 are contrary to facts found. Suggestions in Paragraph 29 do not comport with the situation in Citrus County at present. Paragraph 30 is subordinate to facts found. Paragraph 31 is contrary to facts found. Paragraphs 32-36 are subordinate to facts found. Paragraphs 37 and 38 are not necessary to the resolution of dispute. Paragraphs 39-43 are subordinate to facts found. Paragraph 44 is not necessary to the resolution of dispute. Paragraphs 45-51 are subordinate to facts found. Paragraph 52 is not necessary to the resolution of dispute. Paragraph 53 is subordinate to facts found. Paragraphs 54-56 are contrary to facts found. Paragraph 57 is subordinate to facts found. As to Paragraph 58 it is uncertain whether the staff levels are adequate given the failure to accurately portray the volume of visits. In a related sense, Paragraph 59 as to salary level made to depicts the cost of those salaries, but it fails to include the benefits. Paragraph 60 is to general in its contention. It does not answer the failure to identify the more reasonable statement of staffing levels. Paragraph 61 is subordinate to facts found. The pro formas were not clear and the complementary proof offered at hearing did not confirm the assertion set out in paragraph 62. Paragraphs 63-65 are contrary to facts found. Paragraph 66 is subordinate to facts found. Paragraph 67 is contrary to facts found. Paragraph 68 is not necessary to the-resolution of dispute. Paragraph 69 depicts a situation that is to speculative to have relevance in this case. Paragraphs 70 and 71 are contrary to facts found. While the Paragraphs 72-74 accurately states the circumstance related to the intervenor in its initial involvement in the market. This situation has changed since that time and if Petitioner were to gain entry into the market the probability is that the intervenor's business would be seriously impacted. Paragraph 75 is contrary to facts found. Paragraphs 76 and 77 are subordinate to facts found. Paragraph 78 is not necessary to the resolution of dispute. Paragraphs 79-82 with exception of the last sentence in 82 are subordinate to facts found. The last sentence in paragraph 82 is not accepted. Paragraph 83 is subordinate to facts found. Paragraphs 84 and 85 are contrary to facts found. Paragraph 86 is true if one fails to take into account the advent of services by the intervenor and additional providers who has come into the market who are willing to undertake service to those patients. Paragraphs 87 and 88 are contrary to facts found. Paragraph 89 is subordinate to facts found. Paragraphs 90 and 91 are contrary to facts found. Paragraph 92 is subordinate to facts found. In Paragraph 93, while it is true that Petitioner has an excellent record of service to the Medicaid population in Citrus County, it is unclear why Medicaid patients are not receiving sufficient home health services, compared to what one would expect the demand to be. Respondent's Proposed Findings of Fact Paragraphs 1-3 are subordinate to facts found. Paragraphs 4-6 are contrary to facts found. Suggestion in Paragraph 7 is not a certainty and is not accepted in the fashion presented in these proposed facts. Paragraphs 8-10 are contrary to facts found. Paragraph 11 is subordinate to facts found. Paragraph 12 is contrary to facts found. Paragraphs 13 and 14 is subordinate to facts found. Paragraph 15 is a true statement if other factors which have been discussed in the recommended order are not taken into account. Paragraph 16 is subordinate to facts found. Paragraph 17-19 are not sufficiently relevant to this case to be reported as facts. Paragraph 20 is contrary to facts found. Paragraph 21 is subordinate to facts found. Paragraphs 22 and 23 may be basically an accurate statement of the Respondent's policies; however, this arrangement is not satisfactory on this occasion. Paragraph 24 is subordinate to facts found. Paragraph 25 is contrary to facts found. Paragraph 26 is subordinate to facts found. Paragraphs 27 and 28 are not necessary to the resolution of dispute. Paragraph 29 is subordinate to facts found. Paragraph 30 is true if the rule was found to be applicable. Paragraph 31 and 32 are not necessary to resolution of dispute. Paragraph 33 may be true in terms of the prospective use of the rule but is not influential in this case. Paragraph 34 is not necessary to the resolution of dispute. Paragraph 35 is speculative and has little relevance absent a showing that the expansion into the other areas within the district offset new providers coming into Citrus County, to include the Petitioner. Paragraphs 36 and 37 are subordinate to facts found. The suggestion in paragraph 38 is a statement of limited value in that there are no other competitors in District III from other batches. Paragraphs 39-43 are subordinate to facts found. The first sentence to paragraph 44 is subordinate to facts found. The remaining sentence is contrary to facts found. Paragraphs 45 and 46 are subordinate to facts found. Paragraph 47 is contrary to facts found. Paragraph 48 is accurate as for as it goes; however, it fails to take into account the fact that the Intervenor began to provide home health care to indigent and Medicaid patients. Paragraph 49 is contrary to facts found. Paragraph 50 is subordinate to facts found. Paragraph 51-53 are contrary to facts found. Paragraph 54 is subordinate to facts found. 35 The suggestion in the first sentence of paragraph 55 is true. Again it fails to take into account the change in circumstances with the advent of the Intervenor's services. The second sentence is subordinate to facts found. Paragraph 56 is not in meaningful contribution to the fact finding in the context of the overall facts reported in the recommended order. Paragraphs 57 and 58 are subordinate to facts found. Intervenor's Proposed Findings of Facts Paragraph 1 is subordinate to facts found. Paragraph 2 is not necessary to the resolution of the dispute. Paragraphs 3-5 are subordinate to facts found. Paragraph 6 is not necessary to the resolution of the dispute. Paragraph 7 is subordinate to facts found. Paragraph 8 is; not necessary to the resolution of the dispute. Paragraphs 9 through the first sentence in paragraph 16 are subordinate to facts found. The remaining sentences in paragraph 16 are not necessary to the resolution in dispute nor is the first and last sentences within paragraph 17. The other sentence within paragraph 17 is subordinate to facts found. The first sentence in paragraph 18 is subordinate to facts found. The remaining sentences are not necessary to the resolution of the dispute. Paragraphs 19 through the first sentence of paragraph 23 are subordinate to facts found. The second sentence in paragraph 23 is not necessary to the resolution of the dispute nor is paragraph 24. Paragraph 25 in all sentences save the last is subordinate to facts found. The last sentence is not necessary to resolution of dispute. Paragraph 26 through all sentences in paragraph 30 except the last sentence are subordinate to facts found. The last sentence is not necessary to the resolution of the dispute. The first sentence of paragraph 31 is subordinate to facts found. The remaining sentence is not necessary to the resolution of dispute. Paragraph 32 and the first sentence to paragraph 33 are subordinate to facts found. The remaining sentence in paragraph 33 is not necessary to the resolution of dispute. Paragraph 34 and the first sentence of paragraph 35 subordinate to facts found. The last sentence in paragraph 35 is not necessary to the resolution of the dispute. Paragraph 36 through the first sentence of paragraph 38 are subordinate to facts found. The remaining sentence in paragraph 38 is not necessary to the resolution of dispute. Paragraph 39 cannot be utilized in that the rule in question was not provided to the Hearing Officer under official recognition and is unavailable to confirm the assertion set out in that paragraph. Paragraphs 40 through 43 are subordinate to facts found. The suggestions in paragraphs 44 through 45 are contrary to the impression of the Hearing Officer. Paragraphs 46 through 48 are subordinate to facts found. Paragraphs 49 and 50 are not necessary to the resolution of dispute. Paragraphs 51 and 52 are subordinate to facts found. Paragraphs 53 through 55 as an approach to resolving factual disputes are rejected. Paragraph 56 is subordinate to facts found. Paragraph 57 is contrary to facts found. Paragraph 58 is not in keeping with the analysis of this case and the facts found in the recommended order nor is paragraph 59. Paragraphs 60 through 65 are subordinate to facts found. Paragraph 66 is not necessary to the resolution of dispute. Paragraph 67 and the first two sentences within paragraph 68 are subordinate to facts found. Remaining sentences within paragraph 68 are not in keeping with the analysis performed in the fact finding within the recommended order. Paragraph 69 is subordinate to facts found. Paragraph 70 is subordinate to facts found. Paragraph 71 is not necessary to the resolution of dispute. Paragraphs 72 through 76 are subordinate to facts found. Paragraph 77 is not necessary to the resolution of dispute. Paragraphs 78 and 79 are subordinate to facts found. Paragraph 80 is not necessary to the resolution of dispute. Paragraphs 81-86 are subordinate to facts found. Paragraph 87 is not necessary to the resolution of dispute. Paragraph 88 is subordinate to facts found. Paragraphs 89-91 are not necessary to the resolution of dispute. Paragraphs 92 through 94 are subordinate to facts found. Paragraph 95 is not necessary to the resolution of dispute. Paragraphs 96 through 101 in the first sentence to that paragraph are subordinate to facts found. The remaining sentences in paragraph 101 are not necessary to the resolution of dispute. Paragraph 102 is subordinate to facts found. Paragraph 103 is not necessary to the resolution of dispute. Paragraphs 104 and 105 are subordinate to facts found. Paragraph 106 is contrary to facts found. Paragraph 107 is not necessary to the resolution of dispute. Paragraphs 108 through 116 are subordinate to facts found. Paragraphs 117 and 118 are not necessary to the resolution of dispute. Paragraphs 119 through 122 are subordinate to facts found. Paragraph 123 is not necessary to the resolution of dispute. Paragraphs 124-126 are subordinate to facts found. Suggestion in paragraph 127 that the rotation system will not be employed is rejected. The remaining contents within that paragraph are subordinate to facts found. Paragraph 128 is not necessary to the resolution of dispute. Paragraphs 129 through 133 are subordinate to facts found. Paragraph 134 is contrary to the facts found. Paragraph 135 is contrary to the facts found. Paragraph 136 is not necessary to the resolution of dispute.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Gulf Coast Home Health Service of Florida, Inc. is an existing licensed provider of Medicare-certified home health services in Pinellas County. The parties have stipulated that Gulf Coast has standing to participate as a party in this proceeding. Metro Home Health Care, Inc. is a proprietary agency owned by Ann Durham, Robert Carver and John Timp, a Certified Public Accountant. Metro was incorporated in November of 1984 and has been operating as a home health agency since June of 1985. It currently provides facility staffing with nurses, nurses' aides and mental health workers, and also takes private duty calls from hospitals. Due to the fact that so many patients who are in need of home health care are elderly and eligible for Medicare, referring hospitals and physicians attempt to utilize those home health agencies which are Medicare-certified. Metro proposes to expand its services to provide treatment to Medicare patients, and thus filed an application for a Certificate of Need in December of 1985. A home health agency in Florida must obtain a Certificate of Need from HRS before it can be licensed and become eligible to receive Medicare reimbursement. As the agency is already operational, there is no cost associated with this project. Metro realizes that there is a lag time between the provision of services to Medicare patients and Medicare reimbursement for such services. In order to avoid interest costs, Metro proposes to utilize the profits from its current staffing services to support its home health care program, in lieu of using a commercial line-of credit. Metro believes, however, that lines of credit with banking institutions can be acquired if operational funds are needed in the future. Metro has encouraged and supported the training and continuous education of its staff by providing information and funds for courses offered in the community. It intends to continue this practice. Metro proposes to provide skilled nursing services, physical therapy services, occupational therapy services, speech therapy services, IV therapy, rehabilitative services, social services and home health aid services. Some of these services will be obtained on a contractual basis, as opposed to in-house staffing, depending upon the need for and utilization of such services. Metro proposes to provide two percent of its services to Medicaid patients and two percent of its services to indigent patients during the first year after obtaining a Certificate of Need. During its first year as a Medicare-certified provider, it is anticipated that Metro will provide approximately 75 percent of its services to Medicare patients, 10.5 percent to private pay patients, 10.5 percent to third-party payor patients and 4 percent to Medicaid and indigent patients. In its second year, Metro proposes an aggregate of five percent of its services to be offered to Medicaid and indigent patients. By the end of its first decade, the intent is to have incrementally increased the level of service to indigent and Medicaid patients to ten percent. Metro's current charges for skilled nursing care are in the median range of charges by other home health agencies in the area. Charges for this service range between $40.00 and $60.00, and Metro charges $47.00 per visit. While Metro's Director, a registered nurse, did not have intimate knowledge of the bookkeeping, interim payment reports, cost reports, record keeping or computerization required by Medicare, one of the owners of Metro is a Certified Public Accountant. Since the filing of the Certificate of Need application, the owners of Metro have met with an assigned intermediary for the Medicare program, and they have discussed the completion of forms, patient claims and annual reports, as well as the Medicare reimbursement system. The Medicare program reimburses providers at a rate which represents the lowest of either costs, charges or the Medicare cap for the service provided. Thus, there is little or no profit element in the provision of Medicare services. However, Metro will realize a positive net income through the provision of services to Medicare, private, third party payor, Medicaid and indigent mix of patients proposed for the first year of operation. This is true even with a tripling of the amount of calculated contractual allowances set forth in Metro's application. The figures and projections contained in the pro forma statement of revenues and expenses included in Metro's Certificate of Need application are outdated and some of the utilization estimates may be exaggerated. However, Metro is of the opinion that its existing profits which have greatly increased since the date of its application, will enable it to operate in a financially feasible manner on both an immediate and long-term basis. Metro desires to offer Medicare services so that it will be competitive with other agencies which do so and can receive a fair share of referrals. Hopefully, more referrals will include more private pay and insurance covered patients, which will produce greater profits. The reimbursement rate for services to Medicaid patients is even lower than for Medicare patients, though it has recently been raised. The per visit reimbursement rate for Medicare purposes can be negatively affected by increasing the number of Medicaid and indigent patients served. It would not be financially feasible for a home health agency which served only Medicare patients to provide Medicaid and indigent services. When HRS initially reviewed Metro's application, it utilized an invalid methodology to determine the need for additional home health services in Pinellas County. HRS no longer utilizes this methodology and did not attempt to do so during the final administrative hearing. HRS does not presently have any methodology pursuant to rule or policy for projecting numeric need for new home health agencies. Instead, it looks at the general statutory criteria applicable to Certificate of Need review for all health care services. There were no numeric need methodologies for home health care services offered at the final hearing. While neither the State Health Plan nor the local District Health Plan specifically address or identify the need for home health agencies, both plans emphasize the improvement of access to the medically underserved. There are approximately 29 licensed and approved Medicare-certifed home health agencies in District 5, which includes Pinellas County.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED THAT Metro Home Health Care, Inc. be GRANTED a Certificate of Need to operate a home health agency in Pinellas County, with the condition that a minimum of two percent of total visits be provided to Medicaid patients and two percent of total visits be provided to indigent patients. Respectfully submitted and entered this 5th day of November, 1987, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of November, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-3556 The proposed findings of fact submitted by the parties have been accepted and/or incorporated in this Recommended Order, except as noted below: Petitioner Gulf Coast: 9. Rejected as contrary to the evidence. 10, 11. Rejected as irrelevant and immaterial. 13-15. Rejected as irrelevant and immaterial. 17. Rejected as irrelevant and immaterial. 22. Rejected as hearsay. 23-27. Rejected as irrelevant and immaterial. 29-30. Rejected as irrelevant and immaterial. 31. Partially rejected. It must be assumed that goals in the State and District Plans reflect need. 36. Rejected as contrary to the evidence. Last sentence accepted. 38. Rejected as contrary to the evidence. 39 & 41. Rejected as too broad a conclusion to be drawn from the evidence. 45. Second sentence rejected as hearsay. 50, 51, & 53. Rejected, not supported by sufficient evidence. Last sentence accepted only if private pay or insurance-covered patients are not considered. Last sentence accepted only if private pay or insurance-covered patients are not considered. 60. Accepted only-if it is assumed that the percentage of care rendered to private pay or insurance-covered patients decreases. 62 & 63. These factual findings are accepted, but are incomplete in that they fail to recognize the importance of becoming a Medicare-certified provider in order to also obtain referrals of non-Medicare patients. 64-73. These "findings of fact" are addressed in the Conclusions of Law. Respondent HRS: p. 3, last full sentence Accepted only if it is assumed the agency serves only Medicare patients. p. 4, last sentence of first full paragraph Rejected as not supported by competent evidence. Respondent Metro: The "proposed recommended order" submitted on Metro's behalf does not contain proposed findings of fact, and is more in the nature of closing argument. Consequently, it is not possible to render specific rulings upon Metro's proposed findings of fact. COPIES FURNISHED: Leonard A. Carson, Esquire Carson & Linn, P.A. 1711-D Mahan Drive Tallahassee, Florida 32308 John Rodriguez, Esquire Assistant General Counsel 1323 Winewood Boulevard Building One, Suite 407 Tallahassee, Florida 32399-0700 Ann Durham, Director Metro Home Health Care, Inc. 10707 66th Street North Pinellas Park, Florida 33565 R. S. Powers, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
Findings Of Fact Numeric Need HRS projects a need for one additional Medicare-certified home health agency in District V for the January, 1991, planning horizon. District V includes Pinellas and Pasco counties. Mease and Adventist filed certificate of need (CON) applications in September, 1989, to meet this need. After its initial review of the applications, HRS determined that Mease's application was complete upon filing. HRS projects that population growth in District V will generate a need for 31,000 new home health patient visits by January, 1991. HRS has determined that a cost-efficient agency should make at least 19,000 patient visits annually. Mease's Proposal Mease proposed a Medicare-certified home health agency to be located at Mease Hospital Dunedin. Mease proposed to provide 24,000 patient visits the first year (1991) at a projected per visit cost of $34.00 and charge of $62.00. In its second year (1992), Mease proposed to make 30,000 patient visits at a cost of $32.00 and a charge of $64.00. Mease proposed to provide these services through hospital employees, as opposed to agency staff. Mease's application estimated that the net income would be about $57,000 the first year and about $86,000 the second year. For the first and second years of operation, Mease proposed a payor mix of 85% Medicare, 13% insurance and private pay and 2% Medicaid and charity. Adventist's Proposal Adventist proposed a Medicare-certified home health agency at the East Pasco Medical Center ("EPMC") in Zephyrhills in Pasco County. Adventist projected 11,660 patient visits in 1991 and 16,772 the following year. Adventist proposed charges ranging from $75.00 to $125.00 per hour for nursing visits and $45.00 for home health aides and projected increases of 5% in the second year. Adventist projected a loss of about $70,000 in 1991 and a profit of about $14,000 in 1992. Adventist proposed a payor mix of 65.4% Medicare, 25.3% insurance, private pay, and HMO/PPO, and 9.3% Medicaid and charity. This payor mix was projected for both years. Adventist proposed providing all patient services through agency staff. Adventist did not include its average weighted costs and charges for the first two years of operation. However, the evidence was that the weighted cost is about $67-72 per patient visit. Statement As To Adventist's Capital Projects In its application, Adventist stated under the heading "Capital Projects": As required by Section 381.707(2)(a), Florida Statutes, the applicant has determined that there are no projects which are applied for, pending, approved, or underway in any state as of the time of this application which would have any potential impact upon the ability of the applicant to provide the project proposed in this application. The Adventist application also included audited financial statements as of December 31, 1988, from which the dollars Adventist had committed to construction in progress as of that date could be ascertained. As of December 31, 1988, approximately $23 million had been incurred on construction in progress, and approximately $10,065,000 was expected to be spent to finish these projects. No other information concerning capital projects is contained in the Adventist application. In fact, at the time Adventist submitted its application, it had about $40-50 million in capital projects pending or approved. As a matter of policy, HRS does not require applicants to list all projects as of the date of the application, in addition to the impact statement required by the statute, but HRS does interpret the statute to require at least a statement of an aggregate dollar amount of the projects. Since the capital investment required for opening a home health agency is relatively small, rarely will existing capital projects of a responsible applicant impair the financial feasibility of a home health agency CON application. But HRS interprets the statute as not providing for exceptions for home health agency CON applications. HRS has not by rule exempted Adventist from the requirement of including statements of capital projects and their impact in Adventist CON applications. Adventist's consultants conferred with HRS personnel concerning the "capital projects" requirement before the Adventist application was submitted. Adventist did not want to go to the effort of developing a list of all Adventist capital projects. But Adventist did not prove that HRS personnel told its consultants that it would be sufficient for Adventist to address the "capital projects" as set forth in Finding 11, above. On reviewing the Adventist application, HRS did not notice the manner in which the application addressed the "capital projects" requirement. This is because HRS' consultants were familiar with Adventist and understood it to be sound financially, and they also knew that both the capital requirements of a home health agency and the potential for substantial operating losses were relatively small. Indeed, until the submission of its Proposed Recommended Order, HRS supported the Adventist application. Description of Mease Mease is a corporation comprised of two non-profit acute care hospitals and four clinics. Mease Hospital Dunedin is a 278-bed acute care hospital located in Dunedin, Florida. Mease Hospital Countryside is 100-bed acute care facility located in Safety Harbor, Florida. The four clinics are located in Dunedin, Safety Harbor, New Port Richey, and Palm Harbor. While the two acute care hospitals and three of the four clinics are located in Pinellas County, the fourth clinic is in Pasco County. The two acute care hospitals admit around 12,000 patients per year. The four clinics report approximately 320,000 patient visits per year. There are about 30,000 visits per year to the two emergency departments at the hospitals. About 210 physicians are on the staff of the hospitals and clinics. Mease has existed as a non-profit health care facility in District V for 52 years. All profits are retained by the corporation to expand and improve services. Mease's proposed Medicare-certified home health agency is part of its plan to provide comprehensive health services. Location of Medicare-Certified Home Health Agencies In a home health agency, all of the patient services are provided in the patient's home. Some Medicare certified home health agencies provide all services through a headquarters office. Other Medicare-certified home health provide services through branch offices. The primary purpose of a branch office is to provide a more convenient focus and location for an agency's field staff. TGC in Zephyrhills, for example, has an office of about 3,000 square feet with a nurses' room, supply room, kitchen, conference room, bathroom, and manager's room. Because most referrals to home health care are by phone, a branch office does not greatly affect access to referral sources. It is not terribly significant where a home health agency is located, as long as it has the capability of serving the patients in its service area. However, there are some benefits to the physical presence of a home health agency in the area to be served. With a physical presence in an area, a home health agency can more easily participate in community outreach and can better know the services available to its patients in the community. Medicare Funding of Medicare-Certified Home Health Agencies The Medicare program is funded by the federal government through tax dollars. A CON for a Medicare-certified home health agency is a permit to access the Medicare Trust Fund. Without a CON to provide home health services to Medicare patients, agencies cannot obtain any reimbursement for services to these patients. Irrespective of the cost of providing services to Medicare patients, the Medicare program will only pay a home health agency its reasonable costs up to the Medicare cap. The Medicare cost cap for the Tampa MSA is $78.83. Mease's actual cost per patient visit will be about $44-50, including allocated costs that were not reflected in the application, significantly below the Medicare cap. Mease's costs are likely to be fully reimbursable by Medicare, inasmuch as they appear to be reasonable and below the Medicare cap. Payor Mix of Medicare-Certified Home Health Agency There is no direct correlation between an acute care hospital's payor mix and the payor mix that is predictable for a Medicare-certified home health agency. Medicare-certified home health agencies in District V typically serve less than 2% Medicaid and charity patients. The two hospital-based agencies in District V (Morton Plant and St. Joseph's) reported serving just below 2% Medicaid and charity patients. About 80% of Florida's home health care expenditures under the Florida Medicaid Program are for patients who are also eligible for Medicare. Since Medicare is the primary payor, these patients are ordinarily counted as Medicare, not Medicaid, patients. The percentage of Medicaid patients typically served by a Medicare- certified home health agency is much lower than the percentage of Medicaid patients served in an acute care hospital. Payor Mix Proposed by Mease Historically, of Mease's discharges to home health care about 85-92% are Medicare. For the full 1988 year before its application was filed, Mease referred 85% Medicare. Mease's application reasonably proposed to serve 85% Medicare and 2% Medicaid and charity patients. These numbers are in line with District V historical data. Its payor mix is reasonably based on its referral history. Mease will annually serve approximately between 24 and 30 Medicaid and charity patients--2% of 24,000 projected patient visits in 1991 and 30,000 projected in 1992, at 20 visits per patient. (These projections in the Mease application may be somewhat optimistic for the first two years of operation, but Mease probably can come close to that volume with its inherent referral base.) Whether Either Applicant's Primary Service Area Will Be Unserved in 1991 TGC has operated a Medicare-certified home health agency branch office in Zephyrhills for three years. It primarily serves the Zephyrhills and Dade City areas of east Pasco County. TGC's Zephyrhills office employs 7 nurses, 4 physical therapists, 1 physical therapist assistant, 3 speech therapists, 3 home health aides, 1 occupational therapist, and a social worker. Of these 20 employees who provide home health services, only three are contract employees. About half of TGC's referrals come from East Pasco. In addition to TGC, four other Medicare-certified home health agencies serve the east Pasco County area. Global is one of them. It is a hospital-based (Morton Plant Hospital) agency, also located in Zephyrhills. Rest Care and Gulf Coast are located in Dade City, about ten miles north of Zephyrhills. One of these has its headquarters there. The fifth agency serving the east Pasco County area is in New Port Richey. The five agencies that serve the east Pasco County area are the same number that serve the five-county Jacksonville area. TGC is active in the community, responding positively to monthly requests to appear before the Chamber of Commerce. TGC's Branch Manager has responsibility for the care being provided at the Zephyrhills office. TGC accepts Medicaid and charity patients. In 1989, it provided care to 22 such patients. Through the third week in June, 1990, it served 10 Medicaid and charity patients. However, Medicaid and charity patients are accepted with some reluctance, as the agencies prefer Medicare and private pay patients. The Medicaid and charity patients have theoretical access to the full range of TGC's services, and the number of visits for all patients is determined by the diagnosis. But there is a financial disincentive, to which most home health agencies respond, against providing services not reimbursed by Medicaid East Pasco has two Medicare-certified home health agencies in the same town as the hospital and an agency with its headquarters in nearby Dade City. There are no Medicare-certified agencies headquartered in Dunedin, but there are several nearby in Clearwater and Tarpon Springs. More growth in the Medicare population will occur in the service area of Mease than that of East Pasco. The demand for home health care services will be greater in north Pinellas County than in east Pasco County in January, 1991. Mease, too, has had difficulty placing Medicaid and charity patients with local home health care providers. The Director of Social Services at Mease sometimes cannot successfully talk an agency into taking a purely indigent patient. While EPMC's Home Health Liaison Discharge Planner also sometimes has difficulty in promptly making referrals for Medicaid and charity patients, she successfully placed all but two of these patients in the last two years. The primary service area of East Pasco is not presently underserved. Medicaid and charity patients have geographic access to the full range of home health services in the East Pasco County service area, including: (a) I.V. therapy, (b) chemotherapy, (c) hyperalimentation, (d) parenteral/enteral nutrition, (e) wound care, (f) catheter and colostomy care, (g) diabetic and cardiac teaching, (h) medical supplies, (i) medical equipment, and (j) bilingual personnel. The TGC branch office in Zephyrhills provides the full range of services. By 1991, the geographic area more likely to be underserved due to growth is that in Mease's primary service area. Ability of Applicants to Obtain Projected Patient Volume Adventist and Mease both reasonably project that they will be able to capture at least 60-65% of the referrals that they are now making to home health agencies. Additionally, both will draw from local sources, including nursing homes. Mease will also draw from its four clinics. Consequently, the 24,000 patients visits proposed by Mease in 1991, and the 30,000 patients visits proposed in 1992 are reasonable although on the optimistic end of the range of reasonableness. Mease's proposal contains an estimate of 20 visits per patient. While 20-30 visits per patient is reasonable, the trend is at the lower end of that range. Mease's proposal is within the reasonable range of five to six nursing visits a day. This number reasonably results in an acceptable quality of care. The proposal indicates that social workers would make eight visits a day, which is too high, but this could and would be adjusted when the home health agency becomes operational. Staffing Mease proposes to utilize full- and part-time staff, but no contract staff. There are advantages in having regular staff: (a) commitment to the agency; (b) availability during working hours when not making visits, allowing flexibility for purposes such as training; (c) willingness to see all types of patients, wherever located; (d) generally less expensive; (e) better capability to properly complete Medicare paperwork; and (f) ability to provide continuity of care, which is particularly when patients have to taught how to help care for themselves. Contract staffing, either in whole or in part, can afford financial and operational benefits for a small home health agency or one just starting up, especially if it is community based. Mease proposes a reasonable number of staff (FTE's). Although the proposed salary for Mease's director appears to be somewhat high, other positions' salaries appear low. Overall, Mease provides sufficient salary and benefit dollars. Mease's projected salaries are comparable to those on its own pay scale, effective through June 30, 1990. Benefits available to Mease's full-time staff include: (a) tuition reimbursement, (b) grant and aid program, (c) interest-free scholarship loans, (d) reimbursement for seminars, (e) affiliations with local colleges that do clinical rotations at the hospital, including Pasco Hernando Community College, St. Petersburg Junior College, and LPN students from Pinellas Technical Institute, (f) program for nursing students where they can work while going to school, and (g) internship programs so that new nurses can specialize. Including 25% figured as benefits for its home health care staff, the total salaries in January, 1991, will be $658,640. The application proposed $698,551. At these salaries, Mease would have no recruitment problems. Mease would provide adequate training programs for those who provide home health services. Mease is a large health care provider that has access to many resources for purposes of training. Mease has an active training program. There are four nurses who provide education and in-service training. Periodically, outside experts are hired to provide supplemental education. Mease has an audio-visual department that prepares training tapes and other materials. Financial Feasibilty The cost per patient visit of approximately $45-50 for the Mease proposal is close to the cost at a similar-sized hospital-based agency in Jacksonville. Mease should have included in its pro forma the hospital's administrative and general costs that Medicare requires to be allocated. Inclusion of the appropriate allocation of $150,000 per year in Mease's application does not materially affect the financial feasibility of the project. There will be a direct reimbursement for those costs for Medicare patients, as Mease will be operating under the Medicare cost cap, (even with the hospital- allocated overhead.) Besides, the hospital-allocated overhead would have to be absorbed by Mease, regardless of the source of funds. Adventist's financial expert was refreshingly forthright and candid about the financial objective of a hospital-based home health agency (HHA). The object is for the hospital to allocate as much overhead as possible to the home health agency, up to the cap. The "profitability" of a Medicare-certified HHA is in the additional hospital overhead that can be reimbursed through Medicare payments by its allocation to the HHA. Except in this way, there is no prospect of great profits or, so long as costs are within the cap, risk of great losses in the operation of a Medicare-certified HHA. Since expenses are highly variable and capital costs are low, it is relatively easy to keep costs within the cap, and financial feasibility is not even a real issue in this case. Mease's projected travel cost are reasonable, and Mease has relatively low costs because: (a) an agency making more visits can spread fixed cost farther; (b) administrative efficiency, and (c) Mease plans to use hospital- salaried staff and no contract staff. Mease's project is financially feasible. Its discipline-specific charges, gross revenue, Medicare contractual allowance, salaries, rent, and charity and bad debt write-offs are reasonable. Effect of Proposed Projects on Existing Providers of Medicare-certified Home Health Services There was no evidence from potential competitors concerning any adverse impact if Mease is awarded the CON. Mease will predictably affect the agency to which it refers most of its patients, Independent Global, the hospital-based agency operating near Morton Plant Hospital, which has a branch office in Zephyrhills. The potential impact on Independent Global could be 10%; however, this would not reduce Global's volume below 100,000 patient visits a year. Other Information Relevant to State, Local, and Rule Preferences AIDS Mease commits to serve any patients who present, including persons with AIDS. Mease has "no reluctance whatsoever" to serve AIDS patients. However, as a practical matter, since most of Mease patients will be referrals from a medical community serving a relatively affluent area, and because AIDS patients generally are Medicaid or charity patients, rather than Medicare patients, Mease cannot be expected to serve significant numbers of AIDS patients in its HHA. Range of Services Mease commits to offer the full range of home health care services. Through its two hospitals and four clinics, Mease has a natural cooperative arrangement with area physicians. It also has cooperated with other area hospitals to provide non-Medicare certified home health services. Charity Care Physicians in the Mease system are aware of Mease's policy for treating charity patients. While Mease does not have a sliding fee scale, per se, it only seeks payment consistent with a patient's ability to pay. This policy is advertised primarily through Mease's medical staff. Consumer data Mease commits to continue to provide consumer data to local and state agencies. Quality/Assurance Mease will provide effective quality assurance programs. It must do so to retain its JCAHO accreditation. JCAHO's rigorous standards will have to be met. Referrals Most referrals for home health care, irrespective of the methods of advertisement, come from the medical community, not the public. Mease's medical community includes its two hospitals (378 beds) and four clinics, staffed by 210 physicians. Disproportionate Medicaid Provider Neither Mease nor Adventist has been designated by the state as a disproportionate Medicaid provider. Mease's Capital Projects The capital projects listed in Mease's application are accurate and complete. Mease has asserted and proved that its project is financially sound in spite of these obligations. The capital projects will not adversely impact Mease's proposal.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that HRS enter a final order granting the Mease application (CON Action No. 6022) and denying the Adventist application (CON Action No. 6024). RECOMMENDED this 9th day of October, 1990, in Tallahassee, Leon County, Florida. J. LAWRENCE JOHNSTON 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 9th day of October, 1990. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-1524 To comply with the requirements of Section 120.59(2), Florida Statutes (1989), the following rulings are made on the parties' proposed findings of fact: Mease's Proposed Findings of Fact. 1.-2. Accepted and incorporated. First sentence, accepted and incorporated. Second sentence, unnecessary. Subordinate and unnecessary. 5.-11. Accepted and incorporated. 12. First sentence, accepted and incorporated. Second sentence, accepted but subordinate to facts found. 13.-14. Accepted and incorporated. 15.-17. Accepted but unnecessary. 18.-19. Accepted and incorporated to the extent not subordinate or unnecessary. 20.-22. Rejected to the extent that it ignores and totally discounts the benefits of a physical presence in an HHA's service area; otherwise, accepted and incorporated. 23.-25. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted but unnecessary. Accepted and incorporated to the extent necessary. Accepted but unnecessary. Rejected as contrary to the evidence and not proven. Once operational, all hospital-based HHAs will try to allocate as much hospital overhead to the HHA up to the cap. As a result, the size of "drinks" from the Medicare Trust Fund will tend to equalize. First sentence, accepted and incorporated; rest, accepted but subordinate and unnecessary. Accepted and incorporated. Accepted but unnecessary. Accepted and incorporated. Accepted but subordinate to facts found. 35.-38. Accepted and incorporated. 39. Accepted but unnecessary. 40.-44. Accepted that demand for Medicaid and charity home health is being met, although not without some difficulty, but there probably is some unmet need, especially for services not covered by Medicaid. Adventist's projection for Medicaid and charity referrals probably is too high, and Mease's projection for Medicaid and charity referrals to the proposed Adventist HHA probably is too low. But Mease's projections are tied to more timely and complete published District V data for Medicare-certified HHAs, while the Adventist projections turn to less timely and less complete data that includes non-Medicare-certified HHAs. In any event, in light of the Conclusions of Law, these facts are irrelevant and unnecessary. 45. See 40.-44., above. Otherwise, generally accepted but in part cumulative. 45. First sentence, accepted and incorporated as to Mease but unnecessary as to Adventist. Rest rejected as to Adventist as not proven by the evidence. See 40.-44., above. 46.-48. Accepted and incorporated. 49. Rejected as not proven that Medicaid and charity patients get the full range of services (in particular, services not covered by Medicaid.) Also, some difficulty is experienced in placing these patients, although virtually all eventually are placed. 50.-53. Accepted and incorporated. 54.-55. Rejected, to the extent that they infer that there are no financial barriers at all, as not proven. Accepted as to geographic accessibility. 56.-57. Accepted. As to Mease, incorporated; as to Adventist, unnecessary. First two sentences, accepted and incorporated to the extent that they refer to nursing personnel. The evidence is that some of the other personnel may be understaffed in Mease's proposal. Accepted and incorporated. 60.-62. Generally, accepted but unnecessary. However, there can be advantages to the use of contract staff, especially for a small HHA or one that is just starting up, especially if community-based. There is no reason to believe that Adventist would not shift to the use of hospital-employed personnel as appropriate. There also is no reason to believe that Adventist would try to operate in such a way as to make its HHA ineligible for licensure. Accepted. Incorporated as to Mease; unnecessary as to Adventist. Accepted but unnecessary. 65.-67. Accepted and incorporated. First sentence, accepted and incorporated. Second sentence, rejected as not proven that Mease has access to more resource. It is clear that Mease is larger than EPMC, but it was not proven that Mease is larger than Adventist. Accepted and incorporated. First sentence, accepted and incorporated. Second sentence, accepted but unnecessary. Third sentence, rejected as not proven (except in the case of private pay patients.) Accepted. Incorporated as to Mease; unnecessary as to Adventist. 72.-75. Accepted. Incorporated as to Mease; unnecessary as to Adventist. 76.-77. Rejected as not proven. (It is a "better deal" for "charge-based payors" only.) Accepted and incorporated. Last sentence, rejected as not proven. Rest, accepted as to the branch office only, but not as to the entity as a whole. Unnecessary. 80.-81. Accepted. Incorporated as to Mease; unnecessary as to Adventist. 82.-83. Accepted and incorporated. 84. Accepted but unnecessary. 85.-88. Accepted. Incorporated as to Mease; unnecessary as to Adventist. 89. Accepted but subordinate to facts found. 90.-95. Accepted and incorporated to the extent not subordinate or unnecessary. 96. Accepted and incorporated. Adventist's Proposed Findings of Fact. 1.-5. Accepted and incorporated to the extent not subordinate or unnecessary. Second sentence, rejected as not proven. Rest, accepted but unnecessary. Accepted but subordinate and unnecessary. 8.-10. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted. First sentence, incorporated; rest, unnecessary in light of the Conclusions of Law. Accepted but unnecessary in light of the Conclusions of Law. First sentence, accepted and incorporated. Rest, accepted but unnecessary. 14.-18. Accepted and incorporated to the extent not subordinate or unnecessary. 19. Second and third sentences rejected as not proven. Hospital payor mix does not directly correlate to home health payor mix. Rest, accepted and incorporated to the extent not subordinate or unnecessary. 20.-21. Accepted and incorporated to the extent not subordinate or unnecessary. Rejected as not proven. Except as to services other than nursing, last two sentences, rejected as not proven. Rest, accepted and incorporated to the extent not subordinate or unnecessary. 24.-26. Accepted but subordinate and unnecessary. Last sentence, unintelligible. Otherwise, accepted but subordinate and unnecessary. Accepted but subordinate and unnecessary. Bracketed portion, rejected as not proven. Rest, accepted but subordinate and unnecessary. Last sentence, rejected as not proven. Rest, accepted but subordinate and unnecessary. (East Pasco is not geographically underserved, either.) 31.-32. Accepted but subordinate and unnecessary. 33. Last sentence, rejected. Rest, accepted but subordinate and unnecessary. 34.-35. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated. (Mease has the same kind of informal arrangement in the nature of a sliding fee scale as Adventist now has.) Accepted but subordinate and unnecessary. Last sentence, rejected as not proven. Rest, accepted but subordinate and unnecessary. Accepted and incorporated to the extent not subordinate or unnecessary. Last sentence, rejected as not proven. Rest, accepted but subordinate and unnecessary. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted but subordinate and unnecessary. 43.-44. Accepted but subordinate and unnecessary in light of the Conclusions of Law. First sentence, accepted and incorporated. (However, the numbers probably are not significantly high.) Second sentence, rejected as not proven. Accepted and incorporated. First, sentence rejected as contrary to the evidence and not proven (although the capital costs are minimal.) Second sentence, accepted and incorporated. Accepted and incorporated. Accepted and incorporated to the extent not subordinate or unnecessary. First sentence, accepted except to the extent that it may be a legal conclusion. Rest, rejected because the information that can be obtained from the application predated the application by nine months. Accepted but subordinate and unnecessary. Second sentence, rejected as not proven. As to the rest, Mease's proposed eight visits a day was proven only as to non-nursing personnel. Otherwise, accepted and incorporated. First sentence, accepted but unnecessary. As to second and fourth sentences, generally accepted that contract staff can save some overhead expenses in some situations, especially in low volume (usually community- based) operations. But, in other circumstances, contract staff generally is more expensive than staff. In any event, differences in overhead expense is not as significant in the context of cost-based reimbursement of home health care under Medicare where the applicants will be comfortably within the cap, as in this case. Last sentence, accepted, but some positions are overstated. To the extent accepted, this paragraph is incorporated to the extent not subordinate or unnecessary. HRS' Proposed Findings of Fact. 1. To the extent this is a statement of agency policy, not a conclusion of law, accepted and incorporated. 2.-5. Accepted and incorporated to the extent not subordinate or unnecessary. 6.-7. Adventist's projection on Medicaid and indigent utilization is reejected as being too high. But EPMC's Medicaid and indigent utilization probably still would exceed Mease's, both in percentages and in raw numbers. However, this is unnecessary in light of the conclusions of law. Accepted but unnecessary. Subordinate to facts not proven. Accepted. (However, there also are branch offices in the East Pasco area, and the population and projected population growth is less than in Pinellas and West Pasco. Subordinate to facts in part accepted and in part not proven. Specifically, given the population and utilization in Pinellas and West Pasco, both current and projected, it was not proven that the area is "saturated" with HHAs. Last sentence, rejected. Rest, accepted but unnecessary in light of the conclusions of law. Accepted and incorporated to the extent not subordinate or unnecessary. In part accepted, and in part rejected. Specifically, rejected that Pinellas and West Pasco is "saturated" with home health agencies. A good part of the "need" for home health services calculated by HRS is generated by the population and population growth in Pinellas and West Pasco. Some of the HHAs operating in Pinellas and West Pasco operate at volumes far in excess of what HRS says is optimal. This proposed finding is not a valid basis for denying Mease's application. Last two sentences, rejected as not proven. Mease will increase access to AIDS patients although the increase will not be large. The Mease application does not restrict access to AIDS patients. It just candidly states the fact that, as a practical matter, home health is referred by doctors and that Mease expects most of its referrals to come from doctors on staff at its hospitals and clinics. Otherwise, accepted but unnecessary. Accepted and incorporated to the extent not subordinate or unnecessary. But the data shows that volumes in some HHAs in Pinellas far exceed the optimal level, as determined by HRS. Accepted and subordinate to facts found. The implication that Mease plans to "capture" 77% of the "new visits" is rejected as contrary to the greater weight of the evidence. It makes more sense that Mease plans to "capture" referrals from doctors at its hospitals and clinics now going to other providers, freeing those other providers to make some of the "new visits." For this reason, although the Mease projections for the first two years of operation may be somewhat optimistic, they probably are not too far off the mark. Accepted and incorporated that non-nursing positions are understaffed on the pro forma. But adjustments easily can be made when the HHA becomes operational, and there is no reason to think that Mease will not make necessary adjustments to the pro forma. Accepted and incorporated that the salary assigned to some positions by the Mease pro forma are low. But others are high. There is no reason to think that Mease will not make adjustment necessary to pay its staff reasonable salaries. The Mease proposal is financially feasible. The visit projection may be somewhat optimistic but not so as to in any manner jeopardize financial feasibility. COPIES FURNISHED: Patricia A. Renovitch, Esq. Oertel, Hoffman, Fernandez & Cole, P.A. 2700 Blair Stone Road, Ste. C Tallahassee, Florida 32301 Edward T. Labrador, Esq. Department of Health and Rehabilitative Services 2727 Mahan Drive Tallahassee, Florida 32308 H. Darrell White, Jr., Esq. McFarlain, Sternstein, Wiley & Cassedy 215 South Monroe Street Suite 600 Tallahassee, Florida 32301 Sam Power, Esquire Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Suite 407 Tallahassee, FL 32399-0700 Linda K. Harris, Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700
The Issue Whether the applications for certificate of need numbers 8380, 8381, 8382 and 8383, filed by Petitioners RHA/Florida Operations, Inc., Care First, Inc., Home Health Integrated Health Services of Florida, Inc., ("IHS of Florida,") and Putnam Home Health Services, Inc., meet, on balance, the statutory and rule criteria required for approval?
Findings Of Fact Care First The Proposal Care First, the holder of a non-Medicare-certified home health agency license, was established in March of 1996. Owned by Mr. Freddie L. Franklin, Care First is the successor to another non-Medicare-certified home health agency also owned by Mr. Franklin: D. G. Anthony Home Health Agency ("D. G. Anthony"). Established in May of 1995, D. G. Anthony provided over 10,000 visits in its first 10 months of operation mostly in Leon and Wakulla Counties, pursuant to a contract with Calhoun-Liberty Hospital Association, Inc. Very few of the 10,000 patients were referred to D. G. Anthony by Calhoun-Liberty; they became D. G. Anthony's patients through community-based networks, including physicians, created through the efforts of Mr. Franklin and D. G. Anthony itself. D. G. Anthony was dissolved in 1996. Both its patient census and its staff of 45 were absorbed by Care First. D. G. Anthony's contract with Calhoun-Liberty was substantially assumed by Care First so that it provided service to Medicare patients as Calhoun-Liberty's subcontractor. From the point of view of the federal government, the Medicare patients served by Care First were Calhoun-Liberty's patients, even those who had not been referred to Care First by Calhoun Liberty and who had been referred from other community sources. Care First, therefore, was simply a sub- contractor providing the services on Calhoun-Liberty's behalf. The contract was terminated effective December 1, 1996. Calhoun-Liberty was free to terminate Care First with 30 days notice, a peril that motivated Mr. Franklin to seek the CON applied for in this proceeding. With the termination of the contract, Care First ceased serving Medicare patients, "because Mr. Franklin did not want to enter into another subcontractor arrangement because of all the issues and problems," (Tr. 934,) associated with such an arrangement. Mr. Franklin is involved with nursing homes as the administrator at Miracle Hill Nursing Home in Tallahassee. He is an owner of Wakulla Manor Nursing Home in Wakulla County, and he owns a 24 bed CLF, Greenlin Villa, also in Wakulla County. Miracle Hill has the highest Medicaid utilization of any nursing home in District 2. Both Miracle Hill and Wakulla Manor are superior rated facilities. On the strength of Mr. Franklin's extensive experience with community-based organizations and health care services, as well as Care First's succession to D. G. Anthony and other historical information and data. Care First decided to proceed with its application. In the application, Care First proposes to establish a home health agency that, at first, will serve primarily Franklin, Gadsden, Jefferson, Leon, Liberty and Wakulla Counties. It plans to expand into Madison and Taylor Counties in its second year of operation. Five of these eight counties have high levels of poverty; six of the eight are very rural, with the population spread widely throughout the county. Ninety-six percent of Care First's patients are over age Minority owned, approximately 65% of the patients are members of minorities. Many of the patients live in rural areas and are Medicaid recipients or are uninsured low income persons who do not qualify for Medicaid but cannot afford home health care. Since it will be serving the same patient base as a Medicare-certified agency, Care First has committed to the provision of 7% of its visits to Medicaid patients and 1% of its visits to patients requiring charity/uncompensated care. Care First projects 18,080 visits in its first year and 29,070 in its second year. Care First will promote efficiency through the use of a case management approach. Each patient will be assigned a case manager who will act as the patient advocate to provide care required and to identify and assist the patient with access to other "quality of life" enhancing services. Care First proposes an appropriate mix of services, including skilled nursing, physical therapy, speech and language therapy, occupational therapy, home health aide services and social services. Care First estimates its total project cost at $25,808. Of this amount, $2,000 is indicated as "start-up cost", with nothing allocated to salaries. Care First indicates no "capital projects" other than its proposal for the home health agency in District 2. Care First's proposal would be funded from a $60,000 bank line of credit. Projected Utilization Potential patients will be able to gain access to Care First through several avenues, including physician referral, hospital referral, nursing home discharge, assisted living referrals from community agencies and organizations such as Big Bend Hospice and through private referral. In addition, there are several natural linkages to the community for Care First. Wakulla Manor and Miracle nursing facilities offer Care First's services to discharged residents in need. Very often, residents and families choose Mr. Franklin's agency because they are familiar with him, staff or the quality of care provided. Residents of Greenlin Villa, owned by Mr. Franklin, frequently chose Care First when in need of home health agency services. Mr. Franklin's civic, church, and community involvement is impressive. He is president of the Florida Health Care Association, chairman of the board of the Tallahassee Urban League, superintendent of the Wakulla County Union Church Group, and serves on the advisory board for the Allied Health Department for Florida A&M University. In the past, he has served on the Board of Trustees of Tallahassee Community College. He was accepted as an expert in long-term care administration in this proceeding based in part on his service on the Governor's Long Term Care Commission. Miracle Hill has held a "Superior" licensure rating for the last ten consecutive years. It is the highest rating awarded by the AHCA licensure office and is intended to blazon the high quality of care provided by the facility. Although reported through Calhoun-Liberty, very few of D. Anthony's and Care First's past referrals have been generated through that affiliation. Rather, they have come through community contacts and getting the referrals from "talking with physicians," (Tr. 922), in Tallahassee and the surrounding areas, many of whom Mr. Franklin has gotten to know through his post as Administrator of Miracle Hill Nursing Home. By far, it is through physician referrals that Care First receives most of its patients. Care First's physician referral list includes 47 doctors who referred patients to D. G. Anthony since May, 1995. These doctors practice in urban areas and some have rural clinic offices which they staff on certain days of the week. Physicians are willing to refer patients to Care First because of the quality of care which has been provided by Care First, as well as the reputation of its owners. The Care First application included letters of support from eight physicians who have referred patients to Care First in the past and state that they will continue to support Care First with referrals in the future. Among the letters included are those from Dr. Earl Britt, a practitioner of internal medicine and cardiology in Tallahassee, and Dr. Joseph Webster, who practices internal medicine and gastroenterolgy in Tallahassee. Many of the patients of these two physicians are elderly. Dr. Britt's patients often have chronic hypertension or heart disease, are diabetic or suffer strokes. These two physicians provided over half the total number of patient referrals to D.B. Anthony and Care First. Dr. Britt and Dr. Webster established through testimony that Freddie Franklin and Care First have an excellent reputation for provision of quality of care and enjoy significant support among physicians within the service area. Moreover, Dr. Britt, although based in Tallahassee, stressed the importance of Care First's proven ability to provide home health services in the rural setting both from the standpoint of understanding the needs of the rural patient and from being able to travel over rural terrain in order to deliver services. (Tr. 1151, 1152, 1154). Approximately 11,500 visits were performed by D. G. Anthony staff from the period of May 1995, through April 1996, before they became the staff of Care First. Since the agency has established a presence in the district and has physician and other referral mechanisms in place, it is reasonable to project that Care First will continue to grow and will experience between 18,000 and 20,000 visits in its first year and 28,000 to 31,000 visits in year two as a Medicare-certified home health agency. These projections stem from the historical and very recent monthly growth of D. G. Anthony, as well as demand it is experiencing from Franklin and Jefferson Counties, two counties it does not serve regularly at present but plans to serve regularly in the future. The reasonableness of Care First's projections is bolstered by the conservative number of visits per patient the projections assume, 35, when typically Medicare-certified agencies average at least 35 visits and as many as 60 visits per patient. Care First's utilization projections are reasonable. It enjoys an excellent reputation for quality of care and ability to deliver services. Together with its predecessor, D. G. Anthony, it has a proven track record and has benefited from a referral network that remains in place. These factors, together with the conservative assumptions upon which its projected utilization is based demonstrate that its projected utilization is reasonable. Financial Feasibility of Care First The total project cost for the Care First agency is projected to be $25,808. The majority of the costs are reasonable for this type of health care project. The majority of the project development costs, the application fee and much of the cost of the consultant and legal fees, have already been paid by Care First. Care First's Schedule 2 was prepared in conformance with the requirements of the agency and accurately lists all anticipated capital projects of Care First. The necessary funding for the Care First project will come from Care First's existing $60,000 line of credit with Premier Bank, in Tallahassee. This method of funding the project is reasonable, appropriate, and adequate. Care First has demonstrated the short term financial feasibility of its project. Care First's schedule 6 presents the anticipated staffing requirements for its home health agency. The staffing projections are based upon the historical experience of D. G. Anthony and Care First, taking into consideration the projected start-up and utilization of the agency. The projected salaries are based upon current wages being paid to Care First employees, adjusted for future inflation. Care First's schedule 6 assumptions and projections are reasonable, and adequate for the provision of high quality care. The staffing proposed by Care First is sufficient to provide an RN or an LPN and an aide in each of the eight counties Care First proposes to serve in District 2. Care First's schedule 7 includes the payor mix assumptions and projected revenue for the first two years of operation. Medicare reimburses for home health agency services based upon the allowable cost for providing services, with certain caps. The Care First revenues by payor type were based upon the historical experience of D. G. Anthony and Care First, as well as the preparation of an actual Medicare cost report. The Care First payor mix assumptions and revenue assumptions are reasonable. Care First's projection of operating expenses in Schedule 8A is also based on the historical experience of D. G. Anthony and Care First, as modified for the mix of services to be offered and the projected staffing requirements. The use of historical data to project future expenses adds credibility to the projections. Care First's projected expenses for the project are reasonable. The Care First application presents a reasonable projection of the revenues and expenses likely to be experienced by the project. Care First has reasonably projected a profit of $8,315 for the first two year of operation. Care First's proposal is financially feasible in the long term. As the result of its community contacts, Care First has been offered the use of donated office space in Franklin, Jefferson, Wakulla, and Gadsden counties. The use of donated office space will decrease the cost of establishing a physical presence and providing services in those counties since Care First will not have a lease cost for a business office and a place to keep supplies. Quality of Care Through the experience of D. G. Anthony, Care First has identified the particular needs of the community it served. This experience has been carried over into Care First's provision of services. In the 9 months of Care First's existence at the time of hearing, it provided quality of care. Its predecessor, D. G. Anthony, also provided quality of care. While Care First's experience is relatively limited, there is no reason to expect, based on the experience of both Care First and its predecessor D. G. Anthony, that quality of care will not continue should its application be granted. IHS of Florida The Application IHS of Florida is a wholly-owned subsidiary of Integrated Health Services, Inc. ("IHS") formed for the specific purpose of filing CON applications. IHS operates other home health agencies under other subsidiary names. Pernille Ostberg is a senior vice president of the Eastern Home Care Division of Symphony Home Care Services, Integrated Health Services. In that capacity she oversees nearly 195 operations in six states, including Florida. Her operations include home health agencies, durable and medical equipment distributions, and infusion therapy offered by pharmacists. Under Ms. Ostberg's guidance, IHS has grown to its current roster of 195 agencies in only three years, from a beginning of only five agencies. IHS first acquired Central Park Lodges, primarily a nursing home company which also owned five home health agencies. Once these agencies became Medicare certified, IHS made a corporate decision to acquire additional Medicare certified home health agencies. Beginning approximately three years ago, IHS undertook a series of acquisitions which included Central Health Services, Care Team, ProCare/ProMed, and Partners Home Health. More recently, IHS has acquired the Signature Home Health and Century Home Health Companies. And, immediately prior to the final hearing in this matter, IHS acquired First American Home Health Care, making IHS the fourth largest provider of home health services in America. Of all the home health agencies overseen by IHS, 95% are Medicare certified, and 62-63 are located in Florida. IHS now has a presence in all districts except District 1 and 2. IHS personnel also have extensive experience in starting up new home health agencies. IHS personnel have opened over 40 locations across the United States. IHS employees have extensive experience bringing new home health agencies through successful surveys by the Joint Commission on the Accreditation of Hospital Organizations ("JCAHO") recommendations. Of 18 branches personally taken through initial survey by IHS's Pernille Ostberg, none were recommended to change their operations and none were cited for a deficiency. IHS has recently opened, licensed, and certified new home health agencies in AHCA Service District 5, 6, and 10. They have also received licensure in District 7, 8, and 11. Based on the extensive expensive of IHS personnel, a start up home health agency typically experiences 8,000 - 15,000 visits per first year. Opening a new program requires two months for licensure. It will require a registered nurse for three months to make certain all manuals are in place and that quality personnel are recruited. After achieving licensure, one must wait for a certification survey, which may take as long as six months. The three IHS home health agencies that became certified recently have experienced 200 visits in the first month, a good sign of growth. IHS' umbrella organization for home health organizations is Symphony. Most of their home health companies retained their original names. Other IHS home health companies include ProCare, Central Health Services, Partners Home Health, Nurse Registry, and First American. IHS of Florida has applied for applications in other districts. This applicant filed applications in District 7, 8 and 10 and each were approved. IHS of Florida's CON application number 8382 was prepared by Patti Greenberg with the significant input of IHS and IHS of Florida's operational experts. Ms. Greenberg has prepared 75-100 CON applications, 20-25 of which sought approval for Medicare Certified Home Health Agencies. Each of these prior applications had been approved or otherwise reached settlement before litigation. The Proposed Project Once the needs analysis was complete, IHS examined geographic issues within the 14 county district. IHS examined where the populations required home health agencies and what niche of the market IHS could expect to achieve. Projected visits were determined by examining month by month, how this agency would grow. This projected utilization was subdivided among sub-visit types. Existing IHS home health agencies visit mix (skilled nursing as opposed to home health aide or therapy visits) was used to estimate skill type of the projected total volume. The projected utilization was also subdivided by payor class. This payor class projection was derived specifically for District 2, its poverty levels and its managed care penetration. In the aggregate, IHS projects 7,650 visits in year one and 17,100 visits in year two. This projection is reasonable and achievable. Witnesses for the Agency agreed that IHS of Florida's projected number of visits was "definitely attainable". Past and Proposed Service to Medicaid Patients and for Medically Indigent The payor class analysis allowed IHS to conclude it should condition its approval of its application under the performance of 5% Medicaid and 1% charity care. The balance of the population served by an IHS Medicare Certified Home Health agency would be covered by Medicare. The condition is important as it is a requirement which, if not achieved, will subject IHS of Florida to fines and penalties by the agency. Improved Accessibility The applicant will improve the efficacy, appropriateness, accessibility, effectiveness and efficiency of home health services in District 2 if approved. IHS of Florida will provide good quality of care, should its application be granted. Quality of Care Through competitive forces, the applicant's approval will also improve the quality of care offered by home health agencies in District 2. The approval of IHS of Florida's application will also comply with the need evidenced by the extent of utilization of like and existing services in District 2. Economies from Joint Operations Certain economies derived from the operation of joint projects are achieved by IHS of Florida's proposal. IHS has a home office and corporate umbrella which oversees all of its operations for home health services. This master office offers economies of sale by sharing resources across a wide array of home health agencies in Florida and other states. Thus, the incremental expense for corporate overhead is reduced as compared to a free-standing home health agency. Additionally, this national oversight provides better economies to provide the most recent policies and procedures, billing systems, and other systems of business operation. Financial Feasibility IHS of Florida has the resources to accomplish the proposed project. As demonstrated on schedule 1, and schedule 3 of IHS exhibit 1, the budget for the project is only $144,000. This budget includes all appropriate equipment for both the initial and satellite offices. Budgeted amounts include all required lease expenses, equipment costs and even start-up costs such as salaries for the recruitment of training and staff prior to opening. In total, $52,000 of pre-opening expenses are projected, which is reasonable. IHS of Florida filed applications for other home health agency start-ups in three different districts. The applicant had more than $180,000 in cash on hand and an additional $226,000 assured from a commitment letter from IHS which was also contained in the application. A letter of commitment from Mark Levine, a director and executive vice president of IHS, indicated IHS will provide $250,000 in capital for this specific project. Additionally, IHS will provide up to $1 million in working capital loan to assure no cash flow problems ever arise. A similar letter of commitment appears in each of the CON applications which IHS of Florida has filed. IHS has committed to fund each of the CON applications applied for by IHS of Florida. Each of these letters of commitment for the various CON applications sought by this applicant are on file with the AHCA. In total, the applicant projects $600,000 in capital commitments assured. IHS' balance sheet, reveals access to $60 million in cash and cash equivalent. The record clearly demonstrates an ability of IHS to fund all capital contributions required by the applicant. The current assets of IHS approximate $240 million. In addition to having cash in the bank, IHS is a growing concern and is, in fact, a Fortune 500 company that is publicly traded on the New York Stock Exchange. IHS generates revenues which exceed its annual expenses. In the last year, IHS derived $30 million more than it experienced in expenses. The application is financially feasible in the short- term. IHS' application is also feasible in the long-term. IHS of Florida's utilization projections are reasonable. Budgeted staffing and salaries are reasonable. The cost limit calculation and reimbursement calculation by payor source, which is provided in great detail in Schedule 5 of IHS of Florida's application, is reasonable. Projected expenses associated with this project were reasonably calculated based on the actual experience of other IHS Home Health operations. The reasonableness of these costs are also demonstrated when compared with the cost per visit by existing agencies in District 2. In fact, IHS of Florida predicted it would be a lower cost provider than the expected cost of existing agencies at the time IHS of Florida's operations would begin. IHS of Florida's proposal will have a healthy, competitive effect on the cost of providing services by other providers. Putnam The Proposal Putnam proposes to establish a Medicare-certified home health agency with its primary office located in Bay County. Bay County was selected as the primary office based upon the locations of existing and approved agencies in District 2, the aggregate utilization of each, and the number of individuals aged 65 and over distributed among the existing District 2 counties and agencies. Mr. Alan Anderson is Putnam's sole stockholder, Director, and President. Under the ownership and administration of Alan Anderson, Putnam has provided Medicare-certified home health services in AHCA District 3 continuously since 1986. Mr. Anderson is also the sole owner, director, and president of Anderson Home Health, Inc., a Medicare-certified home health agency serving AHCA District 4 since 1992. Anderson Home Health's CON was obtained by Putnam through the same process undertaken by the prospective applicants in this proceeding. Putnam's District 3 agency has successfully served District 3 residents since 1986 at first through its Palatka office, then growing to its current size of four offices. In District 4, Anderson Home Health, Inc. has also experienced successful operations having grown from its principal office in Duval County to a total of four offices. Putnam's District 3 home health agency began with the original office located in Palatka, followed by offices opened in Gainesville, Ocala and Crystal River. Anderson Home Health, Inc.'s District 4 operation began with the original office located in Jacksonville; the second office was opened in Daytona Beach, followed by the opening of the third office in Orange Park; and the fourth office was opened in Macclenny. Putnam's District 3 agency is JCAHO accredited "with commendation." As part of CON application No. 8383, Putnam has agreed to certain conditions upon award. First, the proposed project will locate its primary office in Bay County. Putnam also conditions its approval with the provision that 0.25% of its admissions will be persons infected with the HIV virus. Four percent of its patients will be Medicaid or indigent patients. Finally, Putnam has conditioned its approval upon the provision of various special programs such as high tech home health services, a volunteer program, and the establishment of a rural health care clinic. History or Commitment to Provide Services to Medicaid and Indigent Patients For Medicare reimbursement purposes, Putnam proposes to maintain a Medicare-only agency and private sister agency which provides services to non-Medicare patients. The private sister agency will provide service to the Medicaid and indigent patients. The costs of providing services to these non-paying or partial paying patients will be absorbed by the agency as a contribution to the community. The establishment of a private sister agency to handle the non-Medicare patients is common in the home health industry. As a condition in the application, Putnam will accept up to 3.0% Medicaid patients. Although it stated in its application that it would accept between .5%-1.0% indigent patients, its conditioning of the application on 4.0% Medicaid and indigent patients would necessitate that it accept at least 1.0% indigent (if not more, should the Medicaid patients fall below 3%) in order to meet the 4.0% Medicaid and indigent care condition. The percentages proposed by Putnam are consistent with the statewide average (approximately 95% Medicare) and the District average (approximately 92.1% Medicare). Bay County's average of Medicare patients is approximately 96.4% Medicare. To meet the 4.0% Medicaid and indigent condition, Putnam's average of Medicare patients might have to be less than the Bay County average but not by much. Certainly, meeting the condition is achievable. The agency's position is that Putnam's Medicaid/indigent commitment is not a ground for denial of the application. Quality of Care Putnam has continuously owned and operated a licensed Medicare-certified home health agency in District 3 since 1986 and has been JCAHO accredited with commendation status since 1994. In an effort to continuously provide quality care, Putnam has developed a comprehensive set of policies and procedures to guide its staff, its physicians, volunteers, patients, as well as patients families. No evidence was presented to suggest that Putnam does not have a history or ability to provide quality care. Availability of Resources, Including Health Manpower, Management Personnel and Funds for Capital and Operating Expenditures Putnam has provided Medicare-certified home health service to the residents of District 3 for ten years. Putnam will be able to share its existing personnel and operations expertise with the proposed District 2 agency. Administrative, Managerial, and Operational Personnel Putnam intends to utilize existing administrative personnel in the start up and overall operation of the proposed agency. These management personnel include the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Data Processing Director, Director of Volunteers, Personnel Director. These experienced personnel will be available to provide valuable management support to the proposed agency. The proposed agency will be operated by an administrator who will report directly to Putnam's CEO, Alan Anderson. The agency's administrator will be actively involved in budget preparation, physician relations, community education, and preparation for regulatory agency surveys. The proposed agency will rely upon the demonstrated experience of key personnel in its initiation. Ms. Nora Rowsey, experienced in the start-up phases of home health agencies, will personally supervise and implement the start up phase of the proposed District 2 agency. Putnam intends to hire individuals to work within the proposed agency who already have experience in the provision of the necessary services. Current employees of Putnam's as well as contract personnel of the District 3 agency have indicated a willingness to provide services in Bay County once the application is approve. Funding and Capital Resources Putnam projects the total costs of initiating the proposed agency to be approximately $70,000. Putnam has simultaneously applied for two other Medicare-certified home health agencies, in Districts 6 and 7. Each of these projects area also projected to cost approximately $70,000. Putnam, therefore, has projected costs associated with all three projects of approximately $210,000. Additionally, there is a $10,000 contingency cost related to the District 3 offices bringing the total expenditure for all capital projects of $220,000. Putnam's application includes two letters from First Union National Bank of Florida which substantiate that there are funds on hand to finance all of Putnam's capital expenditures, including the District 2 proposed agency. As of April 18, 1996, Putnam's bank account had a twelve month average balance of $245,949.02. As of April 18, 1996 the accounts of both Putnam and Anderson Home Care Inc., had a combined twelve month average balance of $676,656.93. The evidence established that these funds exist and are available for all proposed capital projects. In the two years prior to hearing, Putnam showed sound management, significant growth, and a strong financial position. It continues to do so. In an interoffice memorandum dated May 28, 1996, from Roger L. Bell to Richard Kelly, Health Services and Facilities Consultant, Putnams' financial position was described as follows: The current ratio of .62 indicates the current assets are not adequate to cover short term liabilities. The long term debt to equity and equity to assets ratios are very weak. This, along with the negative equity make a weak financial position. The profit margin at .1% is also very weak, and raises some concern with the applicant's ability to cover operating expenses . Putnam Ex. No. 4. This criticism was answered by Putnam. The agency may not have considered certain factors applicable to a predominantly Medicare-reimbursed home health agency. Putnam's current liabilities are payable in a longer term than the receivables are collectible. Furthermore, with provision of 98% Medicare services, which is solely cost reimbursed, there remains only two percent of the operation left to make a profit. A .1% profit from the small amount of insurance and private pay patients indicated financial health. Putnam, moreover, is a viable operation because of its historical success, its knowledge of the industry, its expansion to six locations, its growth in staff, and its growth in patient visits. Putnam has the resources available to provide the necessary administrative, managerial, and operational manpower needed by the proposed home health agency. AHCA's financial criticisms are unfounded; Putnam has on hand the capital necessary for the accomplishment of the proposed project. Putnam has the experience and know-how to make the proposed project work in District 2's rural areas. Financial Feasibility Putnam has the resources to implement this project if approved. Putnam has the same capability that existed when three offices were opened during the period from April 1992 through February 1993, and the same resources when four offices were opened in 1995. In every instance, the new offices were started up with cash on hand from operation. Mr. Anderson, Putnam's President and sole shareholder and director, testified that he spends much time in the financial area of the operations. As of November 29, 1996, after deducting all accounts payable, Putnam has a cash balance of approximately $390,000. Anderson Home Health, Inc. had a balance of approximately $425,000. Mr. Anderson testified that the First Union letters in the application at pages 231 and 232 were correct and that Putnam is in even better shape now than when the letters were written. Putnam is financially feasible in the short term. AHCA contends Putnam's project is not financially feasible in the long term because the projected visits stay the same in the second year and because it does not project a profit in year two of operation. This fails to take into account Putnam's performance over the past ten years which, as the agency conceded at hearing, is an important consideration . Mr. Anderson purchased Putnam in 1986. At that time the agency had a single office in Palatka doing 4,000 visits. Following Mr. Anderson's purchase of the agency it had grown to over 55,000 visits and close to a hundred employees. After the success experienced by Mr. Anderson in Palatka, Putnam filed a CON application for District 4, with a proposed principle site in Jacksonville. The District 4 CON was approved by the agency--without any concerns for financial feasibility nor with any concerns for Putnam's cash flows. Without having any experience or referral sources in Jacksonville, Putnam began doing approximately 7,000 visits. The number of visits jumped to 45,000 in the second fiscal year, 123,000 in the third fiscal year, and as of September 30, 1996 the Jacksonville office performed 158,000 visits. Aside from the extraordinary growth experienced in the Palatka and Jacksonville offices, already discussed, Putnam has opened rural offices also doing very well. The Macclenny office in rural Baker County had over 15,000 visits in the first twelve months and is currently averaging over 1800 visits. The Crystal River office in rural Citrus County made over 12,000 visits in its first year and is currently doing approximately 1400 visits a month. Every new office opened by Putnam or Anderson Home Health since 1991 has been break even or better. Putnam has a proven track record for the successful and profitable operation of new Medicare-certified home health agencies. Putnam's project is financially feasible in the long term. Utilization Projections The application sets forth reasonable utilization projections. Based on Putnam's utilization in the past, there is no reason to believe the projections set forth in the application are or unreasonable or will not be achieved. Impact on Costs Putnam is a high tech provider of home health services and will provide some services not currently available or available only in a limited number of agencies. The impact of approval of Putnam's application on costs in the District will be minimal due to the reimbursement issues associated with Medicare which is cost based. RHA A Not-for-Profit Corporation in District II RHA is not-for-profit corporation whose purpose is to provide a continuum of care to the community. All profits are returned to its nursing homes or agencies as a way of continuing to build the programs. RHA owns two nursing homes in AHCA District II; Riverchase Care Center in Gadsden County and Brynwood Center in Jefferson County. If approved, RHA is proposing to locate its Medicare certified home health agency in existing space within the Riverchase and Brynwood nursing facilities. Both of these facilities are managed and operated by HealthPrime, Inc., a company which operates approximately 40 facilities in 13 states. While RHA is technically the owner and therefore applicant for this CON, HealthPrime would operate the proposed Medicare certified home health agency within the nursing homes. RHA's home health agency would have two offices. The office located in the Riverchase facility would serve Gadsden, Liberty, Franklin, Gulf, Wakulla, Jackson, Calhoun, Washington, Holmes and Bay Counties. The office located in the Brynwood facility would serve Leon, Jefferson, Madison and Taylor Counties. Financial Feasibility The only questions raised by AHCA concerning RHA's financial feasibility went to the ability of RHA to fund this project in conjunction with other CON projects listed on Schedule 2 of its CON application. The largest project on Schedule 2 of RHA's application was a CON application for a 20 bed addition to Riverchase Care Center. At hearing it was determined that since the filing of the instant home health CON application, the 20 bed application had been withdrawn, was no longer viable, and was not being pursued by RHA. Once AHCA's financial expert learned that the 20 bed addition to the Riverchase Care Center had been administratively withdrawn and that its costs should therefore no longer appear on Schedule 2, questions about the financial feasibility of the project were resolved. RHA's project was shown to be financially feasible in the short term based upon the financing commitment of HealthPrime. RHA proved that its assumptions and projections made in its financial analysis are reasonable. These assumptions were based on actual experience in the operation of similar skilled nursing facility based home health agencies, as well as prior experience of other home health agencies in their first two years of operation. RHA's proposed project shows a net income in years one and two and is financially feasible in both the short and long term. Availability and Access of Services To the extent that the number of people needing home health care will increase in the future, there is need for new providers of home health services to provide such availability and access. RHA's willingness to condition its application on service to AIDS, indigent and Medicaid patients can only improve the availability and access to services in the district. In addition, RHA's approval to provide nursing home based home health services is unique to the provision of home health services in District II. Efficiency RHA's proposal, which would place its home health agency within its nursing homes, is unique among the applicants in this proceeding. Such an arrangement provides not only an efficient continuum of care to the patients, it also provides efficiencies and cost savings in the sharing of resources. RHA's proposed project is cost effective because it utilizes existing space and equipment in its nursing homes. Skilled nursing home based Medicare certified home health agencies are specifically recognized by the Federal Medicare program in their cost reports. Home health reports are filed as a part of the nursing home cost report and there is an allocation of the nursing home's cost to the home health agency. This benefits both the provider and the Medicare program through cost savings. RHA's cost per visit to the Medicare program of $48 will be substantially less than the District II average of $66 per visit projected for the time RHA will be operational under the applied- for CON. RHA's proposed project will have no impact on its costs of providing other health care services. Appropriateness and Adequacy RHA proposes to provide the entire range of home health services throughout the district. Given the project need in the planning horizon, RHA's proposal is more than adequate to meet the demand for such services. Quality of Care An applicant's ability to provide quality care is another important factor in statutory and rule criteria. RHA and HealthPrime have shown, through operation of their nursing homes in Florida, all of which have superior ratings, that they have the ability to provide quality health care. In addition, HealthPrime, which will actually operate the home health agency, has experience operating four other nursing home based home health agencies. HealthPrime will utilize its quality assurance programs already in place in its other home health agencies and will seek JCAHO accreditation of this proposed agency. By combining a home health agency with its existing nursing homes, RHA will improve the case management of its patients by providing vertical integration of its services in a continuum of care. Such continuum of care provides a stability in personnel and providers that are working with the patient. Economies and Improvements from Joint or Shared Services As previously discussed, RHA's unique proposal to operate a nursing home based home health agency not only offers a continuum of care for the patient, it also provides fiscal economies to the agency as well as the Medicare program. Resource Availability Based on RHA's experience of hiring personnel for its existing nursing homes in the district, there will be no problem in hiring sufficient personnel for RHA's agency. Fostering Competition The addition of other Medicare certified home health agencies in a district consisting of 10 counties and only 23 providers will promote increased competition and more options for patients. Findings Applicable to All Four Applicants No Fixed Need Pool The agency has no rule methodology to determine the need for Medicare-certified home health agencies. The agency's most recent home health need methodology was invalidated in Principal Nursing vs. Agency for Health Care Administration, DOAH Case No. 93-5711RX, reversed in part, 650 So.2d 1113 (Fla. 1st DCA 1995). There is, therefore, no numeric need determination, or "fixed need pool", established by the agency applicable in this proceeding. District 2 AHCA District 2 is composed of 14 counties. The applicants propose to concentrate their service in various, different parts of the district. Local and State Health Plan Preferences District 2 Health Plan Services to Medicaid and Medically Indigent The first preference under the District 2 Health Plan provides a preference to applicants with a history of providing services to Medicaid or medically indigent patients or commitment to provide such services in the future. Mr. Franklin of Care First has such a history. He is an owner of Wakulla Manor, which had a Medicaid occupancy rate of 88.09% for the period of July-December, and the administrator of Miracle Hill Nursing Home which had a Medicaid occupancy rate of 95.74% for the same period. In the face of such a record, Care First’s commitment of 7% Medicaid and 1% uncompensated/charity patients might seem to pale. But it is a significant commitment, given the nature of the home health agency business, and one upon which Care First agrees its application should be conditioned. IHS conditioned its application on 5% Medicaid and 1% charity care. Putnam conditioned its application on an “Indigent and Medicaid participation equal[ling] 4.0%.” Putnam Ex. No. 1, pg. 51. Putnam, moreover, proposes a Medicare-only agency. Establishment of a private sister agency, a practice common in the home health care industry, will allow Putnam to provide service to the Medicaid and indigent patients separate from its Medicare-only agency. RHA has provided a high percentage of Medicaid/charity days at its Riverchase facility (92.10%) and at its Brynwood facility (90.24%). In addition, RHA is willing to condition its CON on the provision of a minimum of 1% of annual visits to indigent care and 5% to Medicaid. Service to Unserved Counties. Preference 2 states that “[p]reference should be given to any home health services CON applicant seeking to provide home health care services in any county within the District which is not presently served by a home health agency.” There are no counties within District 2 that are not presently served by a home health agency. Service Through a County Public Health Unit Preference 3 states that “[p]reference should be given to a home health services CON applicant seeking to develop home health care services to be provided through a county public health unit in the district in order to more adequately serve the elderly and medically indigent patients who are isolated or unable to travel to permanent health care sites." Of the four applicants, only IHS of Florida’s application is conditioned on working with public health units. IHS has experience working with public health units, working with them currently in Martin County, Manatee County and Broward County. Nonetheless, IHS of Florida will not be providing its services “through” a public health unit. Public Marketing Program Preference 4 states, “[p]reference should be given to a home health services applicant who has a history of providing, or will commit to provide, a public marketing program for services which included pamphlets, public service announcements, and various other community awareness activities. These commitments should be included on the granted CON as a condition of that CON.” Care First currently markets its services to the community and commits to a public marketing program in the future as a condition of its CON. IHS of Florida committed to performing at least one community awareness activity per calendar quarter as a condition of its application. It also indicated, moreover, that it would work to develop public service announcements and marketing programs with the help of public health units or any other appropriate vehicle. The latter indication, however, was not made a condition of the application. Putnam provides educational services to the community, its employees, patients and patients’ families, including the provision of pamphlets, and presenting audio and video tapes as appropriate to the patient and their families. Putnam, however, did not condition its application on a commitment to a public marketing program or commit to such a program in any other way in its application. RHA stated it would accept a condition on its CON to provide a public marketing program for services, including pamphlets, public service announcements and other community awareness activities. It did not reflect such a condition on the “Conditions” page of the application, but, given its statement that it would accept such a condition, there is nothing to prevent the agency from imposing such a condition should it grant RHA’s application. Access Requirements Preference 5 is, “[p]reference should be given to a home health services CON applicant who agrees, as a condition of the CON, to meet the following access requirements for each county in which services are provided: 1) 24 hour local telephone call (or toll-free) contact. 2) 24 hour call/response capability. 3) Maximum on one (1) hour response time following call. Care First currently meets the requirements of Preference 5 in the counties in which it now provides services, and has committed to continue to meet these requirements as a Medicare certified home health agency in all counties in which it will provide services. Care First has made as conditions of its CON, provision for 24-hour accessibility by answering service and installation of a toll-free access line and maintenance of a log of calls during the hours the agency is closed, including documenting of response time to each call. IHS of Florida conditioned grant of its CON on a 30 minute response time, and 24-hour phone availability on a toll-free hot line. Putnam presently provides the services in this preference in its District 3 Medicare certified home health agency and agrees to meet this preference within 90 days of initiating services. It did not, however, make a commitment to meet this preference on the “conditions,” page of its application. There is nothing to prevent the agency from making Putnam’s CON, if granted, conditional upon compliance with this preference. RHA has agreed to have its CON conditioned to meet the access requirements of Preference 5. 2. State Health Plan Service to Patients with AIDS The first preference under the State Health Plan is that “[p]reference shall be given to an applicant proposing to serve AIDS patients.” All four applicants are committed to serving AIDS patients. Full Range of Services. Preference 2 of the State Health Plan is “[p]reference shall be given to an applicant proposing to provide a full range of services, including high technology services, unless these services are sufficiently available and accessible in the same service area." There are currently 11 hospital-based Medicare certified home health agencies in District 2. Several of them provide the high tech services which are sometimes needed by discharged hospital patients. Very few referrals for high tech care have been received by D. G. Anthony or Care First since May, 1995, and there is no indication such services are not available in District 2. Care First has identified, however, an unmet need for the pediatric and pre-hospice home health agency services and has conditioned its application on the provision of those services to the community. IHS of Florida proposes, among other high tech services, infusion therapies, pain management therapies and chemotherapy. There is no evidence, however, that these therapies are not available in District 2. The same is true of Putnam as to the high tech therapies it proposes to provide. There is no evidence that they are not available in District 2. Although RHA indicated in its application that it intended to provide the entire range of services that a home health agency can provide, again, there is not evidence that they are not available in District 2. Disproportionate Share Provider History Preference 3 is “[p]reference shall be given to an applicant with a history of serving a disproportionate share of Medicaid and indigent patients in comparison with other providers within the same AHCA service district and proposing to serve such patients within its market area." Care First, having been formed in March, 1996, did not have a history of providing Medicaid and indigent patients. Care First has committed to 7% of its visits to Medicaid patients, well above the average of existing District 2 agencies of 2-3% Medicaid. Care First has committed to 1% of its visits to charity/uncompensated care. IHS of Florida has committed to 5% Medicaid and 1% charity care. Like Care First, IHS of Florida, as a newly formed corporation, does not have a history of serving a disproportionate share of Medicaid/indigent care patients. Putnam’s commitment is 3% to Medicaid and 1% to charity care. This commitment will be met through its sister home health agency and not the Medicare-certified home health agency for which the CON is sought. RHA has committed to set aside 5% total annual visits to Medicaid patients and 1% of annual visits to indigent care. It has a history of providing a disproportionate share of services to Medicaid patients at its two skilled nursing facilities in District 2, Riverchase Care Center in Quincy and Brynwood Center in Monticello. Underserved Counties Preference 4 is [p]reference shall be given to an applicant proposing to serve counties which are underserved by existing home health agencies. The rural areas of District 2 are traditionally underserved. Putnam will serve Bay County, an underserved county; the three other applicants will serve rural areas of more than one county in District 2. Consumer Survey Data Preference 5 is "[p]reference shall be given to an applicant who makes a commitment to provide the department with consumer survey data measuring patient satisfaction." Care First has committed to providing such data to the agency. IHS of Florida will maintain a data base of results of patient satisfaction surveys and make them available to the agency, just as it already does. Putnam will make available to the agency the results of surveys similar to surveys measuring patient satisfaction Putnam has already developed. Putnam has conditioned its application on providing these surveys to the agencies as well as surveys measuring physician satisfaction. RHA has cited on its “Conditions” page, “. . . (it) will provide the Agency for Health Care Administration with consumer survey data.” Quality Assurance Program and Accreditation The State Health Plan’s Sixth Preference is “[p]reference shall be given to an applicant proposing a comprehensive quality-assurance program and proposing to be accredited by either the National League for Nursing or the Joint Commission on Accreditation of Healthcare Organizations." Care First included in its application a copy of its Quality Assurance Program which has been in use since May, 1995. The program meets the state and federal licensure and certification requirement and the stringent requirements of JCAHO. Moreover, Care First has conditioned its application upon JCAHO accreditation. IHS of Florida submitted documentation regarding its Quality Assurance Program through initiatives such as Total Quality Management and Continuous Quality Improvement. It will seek accreditation from JCAHO within one year of receiving its CON. Putnam, an existing home health agency in District 3 since 1986, has over the years developed and refined a comprehensive quality assurance program which is above the industry standard. The District 3 agency, using its quality assurance program, has attained its JCAHO accreditation “with commendation,” a distinction received by less than 4% of all applicants. Putnam will seek accreditation from JCAHO for its District 2 operation within one year of receiving its CON. RHA is willing to condition its CON on the provision of a comprehensive quality assurance program and accreditation by the JCAHO. Need 1. Numeric Need Since there is no published fixed need pool applicable to this proceeding, the parties, other than the agency, developed their own methodologies for determining numeric need. Each of the methodologies employed by the parties was reasonable. After taking note of the statistics for actual patient visit growth in District 2 from 1991 to 1994, Michael Schwartz began with a conservative number of 60,000 new patient visits per year, a number half of the growth for the lowest growth year of that time period. Multiplying that number times the three horizon years of 1994-97 equals 180,000 new patient visits from 1994 which yields a need for 5.2 agencies. The reasonableness of numeric need in excess of four is supported by other factors. After the filing of the four applications at issue in this proceeding, there are two fewer Medicare-certified home health agencies with certificates of need in District 2. At the same time, home health care visits have been on the increase not only in the district as discussed, above, but in the state as well. Statewide, home health care visits grew from 18 million to 22 million between 1991 and 1994. The utilization of home health care agencies is increasing because of population growth and an increase in the number of visits per patient. The amount of time spent by patients in the hospital is decreasing. The decrease translates into increased need by patients for visits from home health agencies. The need for home health is going to continue to increase because it is a cost-effective alternative to nursing home placement and hospital care. From 1991 to 1994, the number of home health visits more than doubled: from 369,396 to 869,893. This trend continued in 1995. The recent significant growth in the utilization of home health agencies in District 2 is expected to continue. The growth is attributable not only to a population increase in the district but to increase in the use rate for home health agency services as well. The growth in use rates can be explained, in part, by the increase in the senior population (65 and older) and the pressure exerted by managed care for earlier hospital discharges and home health agency services as a viable alternative in some cases to inpatient treatment. The senior population in District 2 is reasonably expected to grow approximately 8% in the five years after 1996, with 15% growth expected reasonably in the 75 to 84 year old population and even higher growth, 25%, in the population over 84 years old. 2. Other Indications of Need Local physicians have experienced difficulty arranging for the existing home health agencies to provide services to patients located in remote areas of District 2. Specialized groups, such as AIDS patients, would, in all likelihood, benefit from additional home health agencies in District 2. Furthermore, a study conducted by IHS of Florida showed that the district has an unusually high rate of diabetes and in four counties has a diabetes death rate 100% greater than the statewide average. Well Springs home health agency is one of the two Medicare-certified home health agencies to cease providing Medicare-certified home health services after the four applicants in this proceeding filed the applications at issue here. Well Springs was licensed in all 14 counties of District 2 and had physical locations in Franklin, Gadsden, Bay, Leon, Liberty, Taylor and Madison Counties. It had a significant share of the District 2 Medicare certified home health agency market with 13.1% of the 1994 visits, the second highest in the District. With Well Springs discontinuing Medicare-certified home health agency services, a void was left for such services in District 2, particularly in those counties in which Well Springs had a physical presence.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Agency for Health Care Administration enter its final order granting CON Nos. 8380, 8381, 8382 and 8384 to RHA/Florida Operations, Inc., Care First, Inc., Home Health Integrated Health Services of Florida, Inc., and Putnam Home Health Services, Inc., respectively. DONE AND ENTERED this 9th day of June, 1997, in Tallahassee, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 9th day of June, 1997. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308-5408 Jerome W. Hoffman, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308-5403 Richard Ellis, Esquire Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308-5408 W. David Watkins, Esquire Watkins, Tomasello & Caleen, P.A. 1315 East Lafayette Street, Suite B Tallahassee, Florida 32301 Mark Emanuel, Esquire Panza, Maurer, Maynard & Neel NationsBank Building, Third Floor 3600 North Federal Highway Fort Lauderdale, Florida 33308 Paul Amundsen, Esquire Amundsen & Moore 502 East Park Avenue Tallahassee, Florida 32301 Theodore E. Mack, Esquire Cobb Cole & Bell 131 North Gadsden Street Tallahassee, Florida 32301
Findings Of Fact On December 18, 1978, the Petitioner, using the name "Upjohn Healthcare Services, Inc." filed its application for certificate of need with the Florida Panhandle Health Systems Agency, Inc. This application was deemed complete on April 20, 1979. The application as originally filed indicated that healthcare services were to be made available on a 24 hour a day basis, seven days a week, with an admission criteria based on the patient's need for home health care, his ability to make available financial resources and the Petitioner's ability to provide the services required. Services were to be provided from a central location in Pensacola, Florida, which is in Escambia County, Florida; to serve Escambia, Santa Rosa and Okaloosa Counties, Florida. The application was subsequently amended to indicate the willingness of the Petitioner to aid Medicare and Medicaid patients in the named counties. The Petitioner, hereinafter referred to as "Upjohn", operating as Upjohn Healthcare Services, Inc., is a subsidiary of the Upjohn company, having forty-Seven certified home health agencies in the United States. The organization has twenty-one offices in the State of Florida and one of those offices is located in Pensacola, Florida. The State of Florida, Department of Health and Rehabilitative Services, is an agency of the State of Florida charged with the duty to evaluate the applications for certificate of need and to issue such certificates as would be appropriate under the terms of Chapter 381, Florida Statutes, and Rule 10-5, Florida Administrative Cede. This application for certificate of need and that of the companion case of Personnel Pool of Pensacola, Inc., d/b/a Medical Personnel Pool, hereinafter referred to "Personnel Pool", are also considered in accordance with the Health Systems plan for the Florida Panhandle effective December 15, 1978. A copy of that document may be found as the Joint Exhibit No. 2 admitted into evidence. The project review committee of the Northwest Florida District recommended to the Northwest Florida Subdistrict Advisory Council that the certificate of need be granted and this action was taken on May 2, 1979. A public hearing was held on May 8, 1979, and on Nay, 17, 1979, the Northwest Florida Subdistrict recommended the disapproval of the project. This disapproval followed a staff report by the staff of the Florida Panhandle Health Systems Agency which suggested that the certificate of need be denied. The application was then presented to the Regional Council, Florida panhandle Health Systems Agency, Inc., and on May 25, 1979, the Regional Council recommended the approval of the certificate of need to serve Escambia, Santa Rosa and Okaloosa Counties, Florida, with the proviso that services be offered Medicare and Medicaid patients. On June 29, 1979, the Respondent in the person of Art Forehand, Administrator of the Office of Community Medical Facilities, attempted to apprise the Petitioner that the request for a certificate of need had been denied; however, this correspondence was misaddressed and it was not until July 9, 1979, that a letter was forwarded to an official of Petitioner's organization and received by that official. On July 31, 1979, the Petitioner appealed the decision of denial of the certificate of need and the case was later assigned to the Division of Administrative Hearings for consideration which resulted in the hearing which is the subject of this Recommended Order. (The details of the various items discussed in developing the chronology of this application may be found in the Joint Composite Exhibit No. 1 admitted into evidence.) In offering its proof to demonstrate the entitlement to a certificate of need, the Petitioner essentially attempted to refute the Department of Health and Rehabilitative Services', hereinafter referred to as "Department", letter of notification of denial. That letter gave five reasons for denying the certificate of need, those reasons being: The proposed project is inconsistent with the Florida Panhandle Health Systems Agency 1979 Health Systems Plan policy guide regarding physical location of a home health agency in the area it intends to serve. The proposal is not consistent with standards and criteria established in Chapter 10-5.11(14), Rules of the Department of Health and Rehabilitative Services. Extenuating and mitigating circumstances which may be considered in approving a certificate of need for a new home health agency have not been adequately demonstrated. There are other available and adequate home health care service providers in the proposed service area which could serve as an alternative to the proposed project and prevent unnecessary duplication of resources. Financial feasibility data do not clearly reflect the inclusion of Medicare and Medicaid resources. The initial reason for denial deals with the claim that the Health Systems Plan for the Florida Panhandle, adopted December 15, 1978, does not allow service of three counties from one central office in Pensacola, Florida. The disputed language in that document is found in Chapter IV at page 216, and it states: No home health agency may be issued a license to operate in a Florida county without having applied for and been granted a certificate of need. The Office of Community Medical Facilities of the Department of Health and Rehabilitative Services considers the recommendation of the Health Systems Agency and established criteria in determining need. Certificates are now issued for a single-county service area, but prior to legislation passed in 1977, an agency could obtain a certificate for several counties. This inconsistency has created considerable confusion in determining need. Although the comment in the document is reluctantly made, it does establish the necessity for the issuance of certificates of need for single-county service areas. This determination is reached, notwithstanding the Petitioner's argument that there is existing precedence for serving more than one county out of a single office. Although there are circumstances in Florida where this approach has been utilized, such service of a multi-county area from a single office would not be allowed on the occasion of the current application. The second reason for denying the certificate of need involves Rule 10- 5.11(14), Florida Administrative Code, which states: (14)(a) A Certificate of Need for a proposed new home health agency or subunit shall not be issued until the daily census of each of the existing home health agencies or subunits providing services within the health service area of the proposed new home health agency or subunit has reached an average of 300 patients for the immediate preceding calendar quarter unless the need for the proposed new home health agency or subunit can be demonstrated by application of the mitigating and extenuating circumstances in rule 10-5.11(14)(b) herein. (b) Mitigating and extenuating circumstances which must be met for the department to issue a certificate of need for a proposed new home health agency or subunit even though the previously described need determination procedure does not clearly indicate need are: Documentation that the population of the proposed service are is being denied access to home health care services in that existing home health agencies or subunits within the proposed service area are unable to provide service to all persons in need of home health care, or Documentation that approval of such proposed new home health agency or subunit would foster cost containment for all providers in the health service area. The Petitioner, in the course of this presentation, took issue with the survey method used by the employee who conducted the staff review of the application. Upjohn claimed that the data gathered on the question of the requirement for a 300 average daily patient census was incomplete and inaccurate. The Petitioner also questioned whether the rule as cited above could be followed in this hearing or should the prior rule which spoke in terms of the daily census of the aggregate of the existing home health agencies or subunits in determining the count of 300 patients be used. The current rule became effective on June 5, 1979, and that rule has application because it was effective at the time of this hearing. Turning again to the question of the formula in deriving the number of patients in the census of the proposed service area, even assuming incompleteness or inaccuracies in the staff evaluation performed by the Health System Agency, the proof offered by the Petitioner in the bearing does not show utilization in excess of the 300-patient census. There are two health agencies now delivering home health care in Escambia County. Northwest Florida Home Health Agency, Inc., is one of those agencies and in its last complete reporting quarter prior to the hearing, there is an indicated patient census for April, which was 71; for May it was 77; and for June it was 73, totaling 221 patients, thereby constituting an average census of 74. This statement of census was established through the testimony of Arthur Long, Executive Director of Northwest Florida Home Health Agency, Inc. (His organization serves only patients who are enrolled with his service group.) Ms. Marian Humphrey, a public health nursing supervisor for the Escambia County Health Department, established the census in Escambia County for that Health Department as serviced by the Visiting Nurses Association, Inc. Beginning in January, 1979, the census was 101 Medicare patients; 14 Medicaid patients; 2 CHAD-PUS patients; 9 private patients and 71 free patients, the latter category being patients who do not pay for services. In February, 1979, there were 164 Medicare patients; 16 Medicaid patients; 2 CHAMPUS patients; 7 private patients and 72 free patients. In March, 1979, there were 128 Medicare patients; 9 Medicaid patients; 2 CHAMPUS patients and 11 private patients. In April, 1979, there were 147 Medicare patients; 13 Medicaid patients; 2 CHAMPUS patients and 9 private patients. In May, 1979, there were 165 Medicare patients; 12 Medicaid patients; 3 CHAMPUS patients; 7 private patients and 88 free patients. In June, 1979, there were 148 Medicare patients; 10 Medicaid patients; 2 CHAMPUS patients; 10 private patients and 61 free patients. In July, 1979, there were 150 Medicare patients; 10 Medicaid patients; 2 CHAMPUS patients; 10 private patients and 77 free patients. In August, 1979, there were 134 Medicare patients; 11 Medicaid patients; 2 CHAMPUS patients; 14 private patients and 96 free patients. The above-cited statistics demonstrate that the two current servicing agencies in Escambia County, Florida, in the preceding full quarter of 1979 which would have been April, May and June, considered separately do not exceed the average of 300 patients for that calendar quarter, nor did the statistics show excess of 300 in other reported quarters. By its Exhibit No. 8, the Petitioner presented statistics on the patient census in Okaloosa County and Santa Rosa County. These statistics were gathered by Blue Cross of Florida. The statistics of the Blue Cross survey show the patient Census services rendered by the Okaloosa County Health Department. These statistics only deal with the years 1977 and 1978 and are, therefore, not current. The most recent quarter in the report on Okaloosa County Health Department shows that in the last quarter of 1978, in-October the patient census was 9; November, the patient census was 14, and in December the patient census was 21. There is a provision in the Blue Cross report which deals with the Northwest Florida Home Health Agency, Inc.; however, these findings of fact defer to the testimony of Mr. Long which showed that in 1979, there was a patient census in April of 36; in May, a patient census of 38 and in June, a patient census of 40, for an average census of 38. The Blue Cross report shows that Santa Rosa County Health Department is the only home health care provider in that county. The most recent census reflected in that report is for January, February and March of 1979. In January the patient census was 41, in February the patient census was 35, and in March the patient census was 33. Analyzing this statistical data provided dealing with Okaloosa and Santa Rosa Counties, although some of the information is not current, it does demonstrate that the census did not exceed the average of 300 patients for the quarters that were reported in either county. In closing out an examination of the discussion of point 2 of the reasons for denial, it is noted that the Blue Cross report deals with the patient census of the Escambia County Health Department but this report is not as current as the presentation by Ms. Humphrey and the Humphrey report is accepted in lieu of the Blue Cross report. Reason 3 for denying the certificate of need talks about the failure of the Petitioner to demonstrate extenuating and mitigating circum stances which would allow a certificate to be issued, notwithstanding the fact that the current service agencies do not exceed the average census of 300 patients for the calendar quarter. Again, that provision of Rule 10-5.11(14)(b), Florida Statutes, states: Mitigating and extenuating circumstances which must be met for the department to issue a certificate of need for a proposed new home health agency or subunit even though the previously described need determination procedure does not clearly indicate need are: Documentation that the population of the proposed service area is being denied access to home health care services in that existing home health agencies or subunits within the proposed service area are unable to provide service to all persons in need of home health care, or Documentation that approval of such proposed new home health agency or subunit would foster cost containment for all providers in the health service area. The first provision under that subsection deals with the inability of the existing health agency to provide services to persons in need of home health care. In examining the question of the ability of the current organizations to provide the necessary health care, Escambia County will be reviewed first. In Escambia County, the Northwest Florida Home Health Agency, Inc., requires that their patients be registered with the organization and their office is open Monday through Friday from 8:00 a.m. to 4:00 p.m. After 4:00 p.m. on weekdays and on the weekends, a registered nurse is on call through the utilization of a "beeper" system. These services only apply to Medicare patients enrolled with the organization. To be enrolled it is necessary for the enrollment to have been achieved through a request by a physician. The Escambia County Health Department is open from 8:00 a.m. to 4:30 p.m. Monday through Friday and serves all classes of patients. There are on- call nurses who work on weekends. The nurses are called by the utilization of the Nurses Directory for Escambia County. The exception to these statements is that two days a year the services of the Escambia County Health Department are not available due to holidays. At night during the week those persons who are patients of the Escambia County Health Department are instructed to arrange for emergency treatment in the Emergency Room or ambulatory care at West Florida Hospital, assuming those patients cannot wait until the following morning for attention. Northwest Florida Home Health Agency, Inc., services Okaloosa County from an office in Fort Walton Beach, Florida. The exact nature of those services is as set out in the discussion of the services provided to patients in Escambia County. The exact details of other current services offered in Okaloosa County and Santa Rosa County were not presented by the Petitioner. Consequently, it was not possible to determine whether those services are adequate. The only evidence that touched on the issue of adequacy of services was testimony offered by one Ruby Savage, who is a volunteer member of the Regional Board of the Northwest Florida Subdistrict Council and a participant in project reviews. She stated that in her opinion there was a need for 24-hour service in Santa Rosa County. This testimony standing alone was insufficient to identify the need for further home health care services. The Petitioner has asserted that the services spoken of in the preceding paragraphs are not sufficient and examples of the lack of available services, according to the Petitioner, are shown on pages 65 through 68 of the transcript of the hearing. Therein are cited several examples of persons unable to receive necessary care of the type which the Petitioner desires to deliver. These examples are accounts given by Ms. Krumel from information purportedly given to her on the subject of the lack of service. Ms. Krumel in the course of the hearing made further comments to the effect that the individuals involved in the project review felt that the services in the question area were insufficient. Those opinions, while they may be true, are not the quality of evidence needed to sustain the Petitioner's contention that there is a need for further health care service in the area in question. The Petitioner made no further presentation on the question of lack of service and on balance the Petitioner has failed to show lack of service. The Petitioner offered testimony on the possibility of the utilization of population increases in the area as a criterion for increasing home health care services. While this criterion formerly appeared in Rule 10-5.11(14)(b), Florida Administrative Code, under the provisions of extenuating and mitigating circumstances, it is not found in the current statement of that rule and may not be used as a criterion for gaining the certificate of need. In discussing the issue of cost containment as outlined in the above- cited rule, the Petitioner made a general comment that if further services are not provided, patients will be required to receive services at emergency rooms, thereby voiding the possibility of cost containment which could be offered by granting the certificate of need to this Petitioner, who is willing to provide 24-hour home health care services. This statement standing alone is insufficient to show that the granting of the certificate of need to the Petitioner will foster cost containment. Finally, the fifth reason for denying the certificate of need was premised upon the failure of the Petitioner to provide financial feasibility data reflecting the inclusion of Medicare and Medicaid resources. The requirement for such data is found in Rule 10-5.09(5), Florida Administrative Code, which states: (5) Documentation showing that the project is financially feasible and can be accommodated without unreasonable charges for services rendered to include a projection of income and expense on a pro forma basis for the first two years of operation after completion of the project. Petitioner claimed at the hearing that it has failed to include this data because the inclusion of Medicare and Medicaid patients in its proposed services was a last minute item and no one in the evaluation process told them that they had to comply with this provision. At the time of the hearing the data was yet to be provided. Upjohn and Personnel Pool were afforded an opportunity to offer their testimony to establish in what respects they might be superior to the other applicant for a certificate of need, assuming that only one certificate of need was to be granted. The two Petitioners did not wish to make any direct attack on the special qualifications of the collateral Petitioner. Both parties proceeded on the basis of offering their remarks to be available for comparison if the contingency were realized which required that only one certificate of need be issued. It is not necessary to detail the special qualifications of these Petitioners, because no certificate of need will be recommended for issuance in Escambia County, Florida, the location in which Upjohn and Personnel Pool are potential competitors for a sole certificate of need. Nonetheless, the facts offered in support of the special qualifications of Upjohn may be found in the transcript of record, pages 187 through 190. The testimony on Personnel Pool's special qualifications may be found in the transcript of the hearing on pages 228 and 251 through 256.
Recommendation This recommendation is being entered in view of the Facts and Conclusions of Law in this case and those Facts and Conclusions of Law in the companion case, D.O.A.H. No. 79-1748, Personnel Pool of Pensacola, Inc. d/b/a Medical Personnel Pool v. State of Florida, Department of Health and Rehabilitative Services. Upon consideration of the Facts herein and the Conclusions of Law, it is recommended that the Petitioner, Upjohn Healthcare Home Health Agency be denied its request for a certificate of need to serve Escambia, Okaloosa and Santa Rosa Counties, Florida. It is further recommended that the agency in entering its final order do so by a process of simultaneous review of this Recommended Order and the Recommended Order entered in D.O.A.H. Case No. 79- 1748, Personnel Pool of Pensacola, Inc. d/b/a Medical Personnel Pool v. State of Florida, Department of Health and Rehabilitative Services, and that final orders be entered on the same date with copies to be served on the representatives of each applicant in this case and in the companion case mentioned above. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Vivian Krumel, R.N. Mr. Art Forchand, Administrator Service Director Office of Community Medical Facil. Upjohn Healthcare Services Department of Health and 15 West Strong Street Rehabilitative Services Old Townhouse Square 1323 Winewood Boulevard Pensacola, Florida 32501 Tallahassee, Florida 32301 Mr. John Owens Mr. Joe Dowless Zone Manager, West Florida Office of Licensure and Cert. Upjohn Health Care Services Department of Health and 3118 Gulf to Bay Blvd. Rehabilitative Services Clearwater, Florida 33519 Post Office Box 210 Jacksonville, Florida 32202 Charles T. Collette, Esquire Departnt of Health and Mr. Herbert E. Straughn Rehabilitative Services Office of Cozmunity Medical Facil. 1323 Winewood Boulevard Department of Health and Tallahassee, Florida 32301 Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 Sherrill E. Phelps Governmental Affairs Representative Personnel Pool of America, Inc. 303 Southeast 17th Street Fort Lauderdale, Florida 33316 Mr. Thomas S. Siler Owner/Administrator Personnel Pool of Pensacola, Inc. 1800 North Palafox Street Pensacola, Florida 32501
