Findings Of Fact The parties' stipulation The parties have stipulated to the following facts: Forum and Amedex timely filed their respective letters of intent and applications with the Department and the District Local Health Council for the July 1986 batching cycle. The Department ultimately deemed the applications complete and, following review, published its notice of intent to deny the applications. Forum and Amedex each timely filed a petition requesting a formal hearing on the denial of their application. With regard to the Forum application, the Department contends that there is no need for the proposed facility, that such lack of need will render Forum's project financially unfeasible, that the project is not the best use of Forum's resources, and that Forum fails to meet the local health plan priority relating to the construction of freestanding facilities with a minimum capacity of 120 beds. All other statutory and rule criteria are satisfied, at least minimally, based on Forum's 60-bed proposal. With regard to the Amedex application, the Department contends that there is no need for the proposed facility, that such lack of need will render Amedex's project financially unfeasible, and that the project is not the best use of Amedex's resources. The Department further contends that Amedex has not demonstrated that it can provide quality of care, that it has not demonstrated that its project is financially feasible in the short or long term, that it has not provided long range plans and that, even assuming minimal need, the size of Amedex' proposed project will cause difficulty in meeting projected utilization needs based on Broward County's past utilization rates. All other statutory and rule criteria are satisfied, at least minimally, based on Amedex' 240-bed proposal. As between the applicants, they agree that a comparative review is appropriate to determine the best applicant. Further, they agree for purposes of this proceeding that the other meets all statutory and rule criteria, at least minimally, except the following: need beyond 60 beds, ability to provide quality of care, and availability of funds for project accomplishment and operation. The parties have further agreed that there are no special circumstances existent in this case upon which a certificate of need is being sought. The Amedex Proposal In July 1986 Amedex filed an application with the Department for a certificate of need to construct a 240-bed skilled and intermediate care nursing home in Broward County, Florida. The total project cost is projected to be $9,040,228. At hearing, Amedex failed to offer any competent proof to demonstrate the immediate and long-term financial feasibility of its proposed project, that it could provide quality care, or that it had available the necessary funds for project accomplishment and operation. 1/ While the Department contended that the proposed project was not the best use of Amedex's resources, it offered no proof to demonstrate what other health services would be a more appropriate use of the resources. The Forum Proposal In July 1986, Forum also filed an application with the Department for a certificate of need to construct a skilled and intermediate care nursing home in Broward County, Florida. Forum's application sought leave to construct a 60-bed facility. The estimated cost for construction of Forum's proposed nursing home is $2,39,800. Forum has the necessary resources for project accomplishment and operation. While the Department contended that the proposed project was not the best use of Forum's resources, it offered no proof to demonstrate what other health service would be a more appropriate use of such resources. Forum is a publicly held health services company which owns, develops, and operates retirement living centers and nursing homes on a national basis. Pertinent to this case, Forum proposes to develop a retirement living center in Broward County that would consist of 120 apartments for independent living, a 30-bed adult congregate living facility, and the proposed 60-bed skilled and intermediate care nursing home. Forum has packaged its centers to provide these three levels of service to meet the desires of retired persons they hope to attract to their retirement community. Each of the three components which comprise Forum's retirement living center are physically connected and share some operational functions, such as a central kitchen and heating plant. Such design provides for an efficient operation, as well as an economical distribution of costs facility wide. The nursing facility proposed by Forum would offer a wide range of services for its residents including: 24-hour skilled and intermediate nursing care, physical therapy services, and other restorative services. Additionally, Forum proposes to offer, as needed, subacute services such as: intravenous care, continuous bladder irrigation, oxygen therapy, nastrogastric tube feeding, ventilator care, insulin treatment, sterile dressing changes, and sterile care of tracheotomies. Forum also proposes to offer in the future, if need is identified and if any necessary agreements can be reached, respite care, adult day care, meals on wheels and hospice care. Forum proposes to seek medicare and medicaid certification, and will dedicate 25 of its beds to medicaid patients. Forum has a history of providing quality care at its existing facilities, and will provide quality care at the proposed facility. Forum has demonstrated the immediate and long term financial feasibility of its proposed project. Forum is a national company, with substantial experience in developing and operating nursing homes and retirement living centers. Due to the excellent growth potential in Broward County for retirement living centers, Forum should be able to capture a sufficient share of the nursing home market to render its proposed nursing home financially feasible. However, in view of the lack of numeric need for such facility as discussed infra, Forum's success will be to the detriment of existing and approved facilities. Numeric need The Department has established by rule the methodology whereby the need for community nursing home beds in a service district shall be determined. Rule 10-5.011(1)(k)2, Florida Administrative Code. The first step in calculating need pursuant to the rule methodology is to establish a "planning horizon." Subparagraph 2 of the rule provides: Need Methodology ... the Department will determine if there is a projected need for new or additional beds 3 years into the future according to the methodology specified under subparagraphs a. through i... The Department interprets subparagraph 2, and the applicants concur, as establishing a "planning horizon" in certificate of need proceedings calculated from the filing deadline for applications established by Department rule. This interpretation is consistent with the numeric methodology prescribed by subparagraph 2, and with the decision in Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 483 So.2d 700 (Fla. 1st DCA 1986). Applying the Department's interpretation to the facts of this case, establishes a "planning horizon" of July 1989. Pertinent to this case, subparagraphs 2 a-d provide the methodology for calculating gross bed need for the district/subdistrict (in this case the district and subdistrict are the same--Broward County) in the horizon year. The first step in the calculation of gross need for the horizon year is to derive "BA," the estimated bed rate for the population age-group 65-74. This rate is defined by subparagraph 2b as follows: BA = LB/ (POPC + (6 x POPD) Where: LB is the number of licensed community nursing home beds in the relevant district. POPC is the current population age 65-74 years. POPD is the current population age 75 years and over. The parties concur that the district licensed bed figure (LB) is calculated based on the number of licensed community nursing home beds as of June 1, 1986, and that there were 3,226 licensed beds in the district on that date. 2/ The parties do not, however, agree as to the date on which POPC and POPD should be derived. The formula mandated by the rule methodology for calculating BA requires that the "current population" for the two age groups be utilized. The rule does not, however, prescribe the date on which the "current population" is to be derived. Forum contends that the appropriate date to establish the "current population" for POPC and POPD is January 1, 1986. The Department contends that the appropriate date is the date of application. In the opinion of David Warner, which opinion is credited, the base for POPC and POPD should correspond to the period for which the average occupancy rate (OR) is calculated. For the July batching cycle, OR is based upon the occupancy rates of licensed facilities for the months of October through March preceding that cycle. January 1, 1986, as the midpoint of that date, is the appropriate date to derive POPC and POPD. Supportive of Dr. Warner's opinion are the past practices of the Department. Between December 1984 and December 1986, the Department routinely used a three and one half year spread between the base population period and the horizon date for "current population" in its semiannual nursing home census report and bed need allocation. That three and one half year spread was adopted by the Department for the same reasons expressed by Dr. Warner. In the batching cycle of January 1987, which cycle immediately followed the cycle at issue in this case, the Department utilized a three and one half year spread between the base population period and the horizon date for "current population" when it awarded beds in that cycle. The Department offered no explanation of why, in this case, it proposed to use a three year spread between the base population period and the horizon date for "current population" in calculating POPC and POPD. Application of the methodology prescribed by subparagraph 2b to the facts of this case produces the following calculation: BA = 3,226 / (158,878 + (6 x 110,217) BA = 3,226 / (158,878 + 661,302) BA = 3,226 / 820,180 BA = .0039332 The second step in the calculation of gross need for the horizon year is to derive "BB," the estimated bed rate for the population age group 75 and over. This methodology is defined by subparagraph 2c, and calculated in this case as follows: BB = 6 x BA BB = 6 x .0039332 BB = .0235992 The third step in the calculation of gross need for the horizon year is to derive "A," the district's "age-adjusted number of community nursing home beds" at the horizon year. This methodology is defined by subparagraph 2a as follows: A = (POPA x BA) + (POPB x BB) Where: POPA is the population age 65-74 years in the relevant departmental district projected three years into the future. POPB is the population age 75 years and older in the relevant departmental district projected three years into the future. The parties concur that POPA and POPB are, respectively, 165,533 and 128,250 for the horizon year. Accordingly, application of the methodology prescribed by subparagraph 2a produces the following calculation: A = (165,533 x .0039332) + (128,250 x .0235992) A = 651.07439 + 3,026.5974 A = 3,677.67 The final step in the calculation of gross need in the horizon year is to derive "SA," the "preliminary subdistrict allocation of community nursing home beds" (gross bed need in this case. 3/ This calculation is defined by subparagraph 2d as follows: SA = A x (LBD/LB) x (OR/.90) Where: LBD is the number of licensed community nursing home beds in the relevant subdistrict. OR is the average 6 month occupancy rate for all licensed community nursing homes within the subdistrict of the relevant district. Occupancy rates established prior to the first batching cycle shall be based upon nursing home patient days for the months of July 1 through December 31; occupancy rates established prior to the second batching cycle shall be based upon nursing home patient days for the months of January 1 through June 30. The batching cycle in which these applications were filed occurred before the Department amended its rule to include the fixed need pool concept. Accordingly, the parties agree that the six month period on which the average occupancy rate is calculated is not as set forth in subparagraph 2d, but, rather is defined by former rule 10-5.11(21)(b)4 as follows: OR is the average occupancy rate for all licensed community nursing homes within the subdistrict of the relevant district. Review of applications submitted for the July batching cycle shall be based upon occupancy data for the months of October through March preceding that cycle... In Broward County (District X) LB and LBD are the same since the county has not been divided into subdistricts. Application of the foregoing methodology to the facts of this case produces a gross need in July 1989 of 3,453 beds, computed as follows: 4/ SA = 3,677.67 x (3226/3226) x (.845/.9) SA = 3,677.67 x 1 x .938888 SA = 3452.92 The net need calculation The final step in the numeric need methodology is to derive net reed from gross need. According to subparagraph 2i, this need is calculated as follows: The net bed need allocation for a subdistrict, which is the number of beds available for certificate of need approval, is determined by subtracting the total number of licensed and 90 percent of the approved beds within the relevant departmental sub- district from the bed allocation determined under subparagraphs 2.a. through f. Notably, former rule 10-5.11(21)(b)9 comports with the new rule in all material respects. While the rule requires that net need be calculated by subtracting "the total number of licensed and 90 percent of the approved beds" in the subdistrict from the gross need previously calculated, it is silent as to the date that inventory should be calculated. The Department asserts, through application of "policy," that the number of licensed beds should be calculated as of June 1, 1986 (the date established by former rule 10-5.11(21)(b)7 for calculating LB and LBD), and the number of approved beds as of December 1, 1986 (the date the Department's supervisory consultant signed the state agency action report). Forum would likewise calculate licensed beds as of June 1, 1986, but would also calculate approved beds as of that date. The Department offered no proof to expose and elucidate its policy choice. As discussed below, the dates used by the Department and Forum for purposes of calculating net need were facially unreasonable. 5/ The inventory of licensed and approved beds under subparagraph 2i, as well as former rule 10-5.11(21)(b)9, are inextricably linked. As approved beds are licensed, the approved bed inventory decreases and the licensed bed inventory increases. The Department's policy choice concerning the dates at which licensed and approved beds are to be counted is neither logical nor rational since it could result in some nursing home beds not being counted as either licensed or approved. For example, if beds were approved and not yet licensed in June 1, 1986, but licensed before the supervisory consultant signed the state agency action report (SAAR), they would not be counted in either inventory. Since the purpose of subparagraph 2i is to calculate a realistic estimate of the net bed need for the horizon year, it is appropriate to use the most current inventory of licensed and approved beds at the point a decision is rendered on an application. This assures, to the greatest extent possible, that the horizon population will not be over or underserved. In those circumstances where the SAAR becomes final agency action, the Department's approach of calculating inventory on the date the supervisory consultant signs the SAAR, assuming that inventory includes licensed and approved beds on that date, might be reasonable. However, where, as here, the SAAR constitutes only preliminary agency action, and a de novo review of the application is undertaken, there is no rational basis for subsuming that inventory. The rule methodology considered, the only rational conclusion is that net need be derived on the date of de novo review, and that it be calculated by reducing the gross need calculation by the inventory of licensed and approved beds, from previous batching cycles, existent on that date. As of the date of administrative hearing, there were 3,226 licensed beds and 695 approved beds in the district/subdistrict. Applying the methodology prescribed by subparagraph 2i to the facts of this case calculates a surplus of 399 community nursing home beds in the district for the June 1989 planning horizon. Consistency with State and local health plans The parties have stipulated that both proposals are consistent with the State and local health plans except for Forum's facial failure to comply with the local health plan priority relating to the construction of freestanding facilities with a minimum capacity of 120 beds. Pertinent to this issue, the local health plan provides: In addition to controlling capacity in order to discourage the construction of unneeded beds, the certificate of need program addresses cost containment by encouraging efficiencies in operation as a criteria to certificate of need approval. A number of operational models have historically proven to be positive influences on efficiency. Licensure laws, for instance, require nursing home staffing patterns to be structured in minimum modules of 30 bed configurations. As a result, the construction of nursing homes with beds totalling numbers not divisible by 30, has the capability of encouraging over staffing. Similarly, experience has shown that freestanding nursing homes constructed at less than 120 beds also are less cost efficient compared to larger facilities. Likewise, since construction and corresponding debt service retirement is greater for freestanding facilities than for new construction on existing facilities, expansion and conversion as an alternative to new construction frequently acts to reduce costs. The basis for the 120-bed minimum size for a "freestanding" facility in the local health plan is to insure efficiency and economy of scale. The 60- bed project proposed by Forum is not "freestanding" but is an integral part of a retirement center which also includes 120 independent living units and a 30-bed adult congregate living facility. Under the circumstances, the economies and efficiencies contemplated by the local health plan will be achieved, and Forum's proposal is consistent with such plan. The local health plan also provides, as a recommendation, that: ... applications for certificates of need to construct additional nursing home beds should be approved so as to support the State policy of 27 beds/1000 population over age 65 in Broward County. Considering the population over age 65 at the applicants' planning horizon, as well as the number of licensed and approved beds in the district, calculates a 14.36 beds/1000 population over age 65 for July 1989. Accordingly, the applicants' proposal is consistent with state and local health plans regarding bed to population ratio. Comparative Review As between the competing applicants, the proof demonstrates that Forum is the superior applicant, and that were the award of a certificate of need appropriate in this case that its application would be the one of choice. Under no circumstance does the proof support an award to Amedex, since it failed to demonstrate the immediate and long-term financial feasibility of its project, failed to demonstrate that it would provide quality care, and failed to demonstrate that it had sufficient resources for project accomplishment and operation. The criteria on balance In evaluating the applications of Amedex and Forum, none of the criteria established by Section 381.705, Florida Statutes (1987), or Rule 10- 5.011(k), Florida Administrative Code, have been overlooked. In the case of Amedex, the lack of need in the district, as well as its failure to demonstrate compliance with relevant criteria as discussed in paragraph 46, demonstrates that, on balance, its application should be denied. In the case of Forum, its application meets all relevant statutory and rule criteria except need. Need is the key criteria in the instant case. Forum's failure to satisfy that criterion by proof of numeric need or special circumstances is dispositive of its application for licensure, and such failure is not outweighed by any other, or combination of any other, criteria.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the applications for certificate of need filed by Amedex and Forum be DENIED. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 25th day of February, 1988. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of February, 1988.
Findings Of Fact On or about January 7, 1981, HCM was issued CON No. 1616, authorizing construction of a 78-bed nursing home facility to be located in Lee County, Florida. HCM has commenced construction of this project on a 120-bed frame. Subsequently, HCM applied to HRS for a CON for an additional 42 nursing home beds to be added to the above-described project. By letter dated April 28, 1983, HRS informed HCM of its intent to deny HCM's application for the additional 42 nursing home beds on the grounds that the proposed project was not consistent with the nursing home bed need methodology contained in Rule 10-5.11(21), Florida Administrative Code. Lee County has been established as a specific subdistrict of HRS District VIII for determination of nursing home bed need. Rule 10-5.11(21)(c), Florida Administrative Code. The record in this cause establishes a percentage of 8.61 of elderly living in poverty in Lee County, as compared to a percentage of 12.70 statewide. There exists a statewide bed need of 27 community nursing home beds per 1,000 population age 65 years and older. Finally, a population of 65,703 is projected for Lee County in 1986. When these factors are combined in accordance with the need methodology formula contained in Rule 10-5.11(21)(b), a need of 1,203 community nursing home beds is established for Lee County in 1986. When this same calculation is made districtwide, using a projected 1986 population for District VIII of 201,392 age 65 and older, a need for 3,686 community nursing home beds results. At the time of final hearing in this cause, there were 748 existing licensed community nursing home beds in Lee County, and an additional 222 such beds which had previously been approved by HRS. When the total of 970 existing and approved beds are subtracted from the 1986 projected bed need in Lee County, a net bed need of 233 beds results for 1986. At the time of final hearing in this cause, there were 3,335 existing licensed community nursing home beds in District VIII, and an additional 1,337 which had been approved. The total of 4,512 existing and approved community nursing home beds in District VIII exceeds the need in District VIII according to the requirements of Rule 10-5.11(21) by 824 beds. Where, as here, the evidence establishes that a subdistrict indicates a need for additional bed capacity, but the district as a whole shows no additional need, Rule 10- 5.11(21)(f)2, Florida Administrative Code, establishes a current utilization threshold of 90 percent or higher in the subdistrict. In this case, the evidence establishes that the appropriate current utilization rate for Lee County is 91.5 percent. In addition, Rule 10-5.11(21)(h)2, Florida Administrative Code, requires a prospective base rate of utilization of 80 percent when the need methodology indicates a subdistrict need and the lack of need in the district as a whole. The evidence in this cause establishes an average Lee County patient census of 684, and 970 currently licensed and approved community nursing home beds which must be factored together with HCM's request for an additional 42 beds. When the formula contained in Rule 10-5.11(21)(g) is applied to this data, the prospective utilization rate is 67.6 percent, which fails to meet the threshold 80 percent requirement contained in Rule 10-5.11(21)(h)2. HCM apparently does not contest the results of the application of the bed need methodology contained in Rule 10-5.11(21), but instead argues that the results of the formulae should not be applied to its application because of the existence of exceptional circumstances in Lee County. In this regard, HCM adduced testimony attempting to establish an historical imbalance between the number of community nursing home beds located in Lee and Sarasota Counties, purportedly necessitating the placement of Lee County residents receiving Medicaid or assistance from the Veterans Administration 70 to 100 miles from their families, or continuing hospitalization of those patients in a more costly acute care facility. It is specifically concluded, that the record in this cause fails to contain any competent, credible evidence to establish that Medicaid and VA recipients in Lee County have been so historically underserved as to merit the granting of the 42 additional nursing home beds requested by HCM. Further, even if this were not the case, HCM has failed to establish that the 222 additional community nursing home beds approved for Lee County will not adequately serve the interests of Medicaid and VA recipients in Lee County in 1986. Rule 10-5.11(21) purports on its face to account for the needs of the elderly over 65 years of age living in poverty, and this record contains no showing that the rule in any way underestimates that need.
Findings Of Fact Venice Hospital, a general acute care hospital offering 342 medical/surgical beds and 30 bed's for general psychiatric care, services a population of approximately 110,000 people in Southern Sarasota and Northern Charlotte Counties. Approximately 80% of its patients are covered by Medicare. This figure being higher than average, puts it somewhere in the top 5% of Medicare providers in Florida. The hospital's services are concentrated on geriatric patients and it is developing several programs devoted to that type of patient. It has recently received approval for nursing home development and operates a home health agency. Missing from the geriatric spectrum of services is the hospital based skilled nursing facility, (SNF), which is the subject of this action. Sarasota County currently has four med/surg hospitals, including Petitioner which is the only hospital in the Venice area. Petitioner has a licensed psychiatric unit which operates under separate rules and which is licensed separately but within the hospital cycle. The patients which are treated in that unit are of a different demographic make up than those treated in the med/surg beds and the staff which treats them is different. Petitioner completed a study of the potential need for SNF beds in the hospital which led to the conclusion being drawn by it that this service should be established. Mr. Bebee's review of the applicable rules and statutes indicated to him that the hospital could elect to designate a special care unit within the hospital without even having to go through Certificate of Need, (CON), review. A letter was submitted by the hospital to the Department on February 8, 1990, asking for an exemption from CON review for that project. Because no response to that letter was forthcoming, and because the hospital review cycle was fast coming up, on February 22, 1990, Mr. Bebee submitted a LOI to the Department seeking to convert 42 med/surg beds to a hospital based SNF facility at a cost of $310,000.00. After the LOI was sent, on February 26, 1990, Ms. Gordon-Girvin, on behalf of the Department, responded by letter to Bebee's inquiry letter, indicating the CON review process was a necessary part of the process for Petitioner's facility, but that the LOI and application should be filed in the next nursing home batching cycle by April 30, 1990. Shortly thereafter, by letter dated March 13, 1990, Ms. Gordon-Girvin rejected the LOI which Petitioner had submitted in the hospital cycle since, according to the Department, it was properly "reviewable under the nursing home review cycle rather than the hospital review cycle." Notwithstanding that rejection, and understanding the Department's position as to which cycle was appropriate, on March 26, 1990, Petitioner submitted its CON application for this project, modified to seek only 36 beds. By undated letter, the envelope for which was postmarked April 16, 1990, Ms. Gordon-Girvin declined to accept that application for the same reason she had rejected the LOI. Petitioner has since filed a CON application for the same project in the current nursing home cycle, on a nursing home application form. It did this to keep its options open but considers that action as being without prejudice to the application at issue. Though numerical bed need is not in issue in this proceeding, a brief discussion of general need is pertinent to an understanding of why Petitioner has applied for approval of this project. Petitioner is of the opinion that SNF beds within the hospital setting will provide better care for the patients than could be provided in a nursing home. Many of the patients in issue are receiving intravenous applications of medicines; taking antibiotics; require orthopedic therapy; or are in respiratory distress calling for ventilator or other pulmonary procedures. These patients need a continuing level of nursing care on a 24 hour basis but no longer qualify for a hospital continued length of stay. Petitioner currently has and is taking care of such patients in the facility, but would like to do so in a more organized, systematic manner which could be accomplished in a hospital based SNF. In addition, reimbursement rules dictate that patients no longer needing full hospital care but who remain in the hospital, become, in part, a cost to the hospital because no meaningful reimbursement is received for thatlevel of care. They would qualify for Medicare reimbursement, however, if the unit were designated and certified as a SNF. Medicaid does not recognize these beds as reimbursable because they are in a hospital. Certification for the hospital based SNF would be through the Health Care Financing Administration, (HCFA), and the Medicare program. To secure this certification, the hospital based unit would have to be a distinct part of the facility and not merely consist of beds scattered throughout the facility. Once certified, the unit is not referred to as a nursing home by HCFA or Medicare, but is classified as a hospital based unit. Because Petitioner sees this as a hospital project - a service that the hospital would be providing under its license, it chose to file for the approval in the hospital cycle rather than in the nursing home cycle. Bebee is familiar with the certification process for both hospitals and nursing homes. The latter is a lengthier process and is substantially different from that used for hospitals. In his opinion, it does not give the hospital based applicant the opportunity to properly justify the approval of a hospital based SNF since it deals more with the requirements of a community based facility. The nursing home form is highly structured whereas the hospital form makes it easier to identify and supply the appropriate supporting information for the project applied for. Further, Bebee does not consider the hospital based SNF bed in the same context as a community nursing home bed. The type of patient is not the same nor are the resources required to treat that patient. Petitioner has purchased a CON to construct a 120 bed community nursing home within the Venice area which will have some SNF beds in it. Nonetheless, because of the basic difference between the services, it still plans to pursue the hospital based SNF. A Florida Hospital Association study concluded that SNF in hospitals are different and there is a lack of this type of service in the hospitals throughout the state. This study, dated May, 1989, at Page 5 reads: Conversion of hospital beds to nursing home beds could improve the financial viability of hospitals, reduce purchasers' and consumers' health costs, and improve access to care for patients requiring higher levels of nursing care, [if they are needed and meet quality care requirements]. Bebee also points out that if this project is considered in the nursing home cycle rather than in the hospital cycle, it would result in a hospital competing with nursing homes which are seeking a different type of bed - community versus SNF. Current community nursing home bed need is set at 0. Petitioner's nursing home cycle application was filed under the "not normal circumstances" provision, but there may still be substantial contest. This type of litigation, he believes, adds unreasonably and unnecessarily costs and is a resultant financial burden to the hospital. Mr. Balzano, a health care consultant and Petitioner's other expert, confirmed and amplified the substance of Mr. Bebee's thesis. He compared hospital based SNFs with those in community nursing homes and found notable differences aside from the statutes and rules governing each. Petitioner's current beds are controlled under Chapter 395, Florida Statutes, and Rule 10D- 28, F.A.C. If some were converted to SNF beds under the pending application, they would still fall under the purview of that statute and rule. On the other hand, community nursing home SNF beds would be controlled by the provisions of Chapter 400, Florida Statutes, and Rule 10D-29, F.A.C. There is a substantial difference between them. Other differences are: Patients in hospital based SNF beds generally have greater nursing requirements than those in SNF beds in community nursing homes. Staffing in hospital based SNF is generally higher than in free standing nursing homes. The average stay is shorter in a hospital based SNF. Patients are not there for continuing care but for restorative care. The size of a hospital based SNF unit is generally smaller than that in a free standing unit. Costs are usually greater in a hospital based SNF unit reflecting the greater needs of the patient. Therefore, reimbursement is generally higher. Health services in the different systems are different and a comparative review would be difficult. The questions in the different application forms reflect a different approach and in the nursing home application, relate to residential type care. This is not the case in the hospital form. Costs relating to the use of an existing facility would be cheaper for the hospital based unit when compared with building a new nursing home facility. However, the costs of hospital construction are usually higher than nursing home construction though the quality of construction is generally better. The operating costs for the more complex services provided in a hospital based unit are higher and Petitioner would have trouble competing if reimbursement were based on the classification as a nursing home. Higher staffing levels and higher staffing costs in a hospital based facility would act in disfavor of that facility. The state generally looks with greater favor on projects for Medicaid patients. Hospital based units are not oriented toward that group and would, therefore, not be given the same consideration, as would be a nursing home which catered to Medicaid patients. The type of patient, (residential vs. subacute) has an impact. The hospital based unit provides treatment to the more acutely ill patient. SNF patients who need that higher degree of care would get it better at a hospital based facility which has greater resources to meet patient needs. Mr. Balzano feels it is unfair to compare the two types of properties. The differences in the programs would have an impact on the issue of need when comparative review is done. A SNF in the hospital setting is different but would be compared, if the nursing home cycle were used, against the total pool of community nursing home beds even though the patients are different and their need for services are different. Need methodology looks at historical utilization. Hospital based SNF patients turn over more frequently than do community nursing home patients and the occupancy level is not as high in the hospital based setting. This would bring the average occupancy rate in an area down and could affect the need for community beds across the board. It is also noted that hospital based SNF beds would not be appropriate to house community nursing home patients who could not be accommodated in a nursing home, and vice-versa. SNF patients could normally not be appropriately treated in a community nursing home because of their greater needs. If compared in a batched review, however, they would be considered together without that distinction being made. Since all other hospital services are reviewed under the provisions of Chapter 395 parameters as hospitals, Balzano sees it as inconsistent to review hospital based SNF beds under the nursing home criteria. He can find no statutory or rule provision requiring this. The Department has drafted a proposed rule on the subject but that proposal is presently under challenge. Further, Medicare considers hospital based SNF beds and community nursing home based SNF beds as different entities with the hospital based beds earning a higher reimbursement ceiling due to the increased services and the different type of patient. According to Mr. Balzano, in Florida, hospital based SNF beds account for 1/2 of 1% of all hospital beds. Nationwide the figure is 4%. Balzano feels this is because in Florida there is no criteria to judge need against and therefore these beds are compared to all nursing home beds. He considers this wrong, especially in a state where there is such a high percentage of elderly patients. It is, in his opinion, poor health planning, and when compared against other nursing homes, the hospital based SNF unit will always be at a disadvantage. The testimony of Ms. Sharon Gordon-Girvin, Director of the Department's Office of Community Health Services and Facilities, reveals the Department's rationale in its rejection of the Petitioner's LOI for the instant project and the subsequent return of its application. The application was rejected because there was no underlying LOI for the project. The LOI was initially rejected as having been filed in an inappropriate cycle, (hospital). The Department's policy, calling for applications for all extended care or hospital based skilled nursing facility beds to be filed in a nursing home batching cycle has been in place for an extended period going back before 1984. The Department looks at extended care beds and SNF beds as somewhat equivalent but different. The designation of extended care facility beds initially used by HCFA, (Medicare), in hospital situations is no longer applicable. Now, Medicare recognizes SNF beds in hospitals, but does not distinguish them from other types of hospital based beds. The service is considered the same and the patients must meet identical admissions criteria. The reasons relied upon by the Department, from a health planning standpoint, for reviewing applications for hospital based SNF beds in the nursing home cycle are: Medicare conditions of service and admission criteria are the same, and The State nursing home formula rule projects a need for all nursing home beds, (SNF and ICF) , and does not differentiate between type. Providers compete for the beds, not where they will be used or under what conditions. The mere need for special treatment such as ventilators or intravenous antibiotics is not controlling. If the patient does not need the acute care provided to hospital acute care patients, since a "subacute" status is no longer recognized by the state, it is the Department's position that that patient should be in intermediate care status. This position is incorporated in the Departments proposed rule which is currently under challenge. It had been elucidated, however, in both the 1988 and 1990 editions of HRSM 235-1, relating to Certificates of Need, where at section 9-5 in both editions the text reads: 9-5 Skilled Nursing Unite in Hospitals. Beds in skilled nursing units located in hospitals will be counted in the nursing home bed inventory, even though they retain their licensure as general medical surgical beds. In addition, the Florida State Health Plan for 1989 and for each year since 1984, has counted hospital based SNF beds in the nursing home bed inventory. The parties stipulated to that point. Ms. Gordon-Girvin admits that it is sometimes difficult for an applicant to apply for hospital based SNF beds on a nursing home application for, but claims that is as it should be. She asserts that the patients are the same, (disputed), and since, she claims, a hospital cannot provide the same services that a full service nursing home could provide, the applicants should be differentiated on the basis of services rather than patient category to justify the additional cost inherent in the hospital based setting. In short, she believes the current situation is appropriate since it requires the applicant, a hospital, to look more carefully at the terms and conditions of the services to be provided. In so far as this results in health care cost savings, her position is accepted. She also contends that the Florida Hospital Association study relied upon by Petitioner to support its position that hospital based SNF bed applications for distinct units cannot compete fairly against nursing homes in a comparative CON review, is not pertinent here considering it was prepared to examine an excess of hospital bed inventory and possible alternative uses as income sources. Regardless of the purpose of the study, absent a showing that it is unreasonably slanted or biased, its conclusions have not been successfully rebutted. Ms. Gordon-Girvin also contends that the low percentage of hospital based SNF beds as compared to total hospital beds is a positive result of the state's efforts to reduce costly services in favor of less costly alternatives. The Department has the exclusive charter to determine which services are to be reviewed and how the review is to be conducted. Even if the proposed rule formalizing the procedure questioned here is stricken, the policy currently being utilized by the Department would still be valid and appropriate. Psychiatric, substance abuse, and rehabilitation beds in hospital inventories are considered distinct from acute care beds, but are still classified as hospital beds because there are no reasonable alternatives for treatment of those conditions. With regard to those patients using hospital based SNF beds, however, the Department claims there is an alternative, the community nursing home based SNF beds. In further support of the Department's position, Amy M. Jones, the Department's Assistant Secretary for Health Care Facilities and an expert in facility licensing and certification in Florida, pointed our that the Department treats hospital based SNF beds and community nursing home SNF beds the same because: conditions of participation are the same and the Department wants to look at and compare similar activities in the same cycle, and pertinent statutes and rules both provide for comparison of similar beds and similar services. Section 395.003(4), Florida Statutes, defines the various types of hospital beds as psychiatric, rehabilitative, and general medical/surgical acute care beds regardless of how they are used. The HCFA Conditions of Participation call for certification of SNF beds as either a distinct part of another facility or as a free standing facility. The agency regulations, as outlined in The Federal Register for February 2, 1989, outlines the requirement that SNF beds in a hospital be surveyed just as are community nursing home SNF beds. Taken as a whole, it would appear that both federal and state regulatory agencies look at SNF beds, regardless of where located, as an integral part of a nursing home operation as opposed to a hospital operation.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that a Final Order be entered by the Department affirming its rejection of the Petitioner's Letter of Intent and CON application for the conversion of medical/surgical beds to SNF beds filed in the hospital batching cycle. RECOMMENDED this 30th day of August, 1990, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of August, 1990. APPENDIX TO RECOMMENDED ORDER IN CASES NOS. 90-2738 & 90-3575 The following constituted my specific rulings pursuant to S 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: Not a proper Finding of Fact. Accepted and incorporated herein as it relates to Petitioner's filing of the LOI and the CON application. The balance is background information and is not a proper Finding of Fact. 3.-6. Accepted and incorporated herein. Not a proper Finding of Fact but a statement of party position. Accepted and incorporated herein except for first sentence. Accepted and incorporated herein. Accepted. Accepted. &13. Accepted and incorporated herein. 14.&15. Accepted. Accepted and incorporated herein. Accepted and incorporated herein. 18.-21. Accepted. Not a Finding of Fact but merely a restatement of the testimony. Accepted and incorporated herein. Accepted and incorporated herein. &26. Accepted and incorporated herein. Accepted. &29. Not a Finding of Fact but argument and a restatement of testimony. Not a Finding of Fact but argument. Not a Finding of Fact but a comment on the evidence. Accepted. Recitation of the witnesses testimony is accurate, but the conclusion drawn does not necessarily follow. Frequency of use does not necesarily determine the finality of the policy. Not a Finding of Fact but a comment on the evidence. Accepted as a presentation of the contents of the document. Accepted. Accepted as represented. 38.-40. Accepted and incorporated herein. 41. Accepted as a restatement of testimony. 42.&43. Accepted. Accepted. &46. Accepted. Accepted. Accepted. FOR THE RESPONDENT: 1.&2. Accepted and incorporated herein. 3. Accepted. 4.-6. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and incorporated herein. COPIES FURNISHED: Richard A. Patterson, Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive - Suite 103 Tallahassee, Florida 32308 Jeffery A. Boone, Esquire Post Office Box 1596 Venice, Florida 34284 Linda K. HarSris General Counsel DHRS 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 Sam Power Agency Clerk DHRS 1323 Winewood Blvd. Tallahassee, Florida 32399-0700
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, documentary evidence received and the entire record compiled herein, I make the following relevant factual findings. Petitioner, Stacey Health Care Centers, Inc., is licensed to operate Riverside Care Center, located at 899 Northwest Fourth Street, Miami, Florida, as a nursing home in compliance with Chapter 400, Part I, Florida Statutes, and Chapter 10D-29, Florida Administrative Code. On July 9, 1986, James A. Bavetta, assistant area supervisor, Office of Licensure and Certification, made a visit of Riverside's facility and determined that Ralph Stacey, Jr., the administrator of record, was acting in the capacity of administrator for two facilities, the subject facility and another facility in Kentucky, without having a qualified assistant administrator to act in his absence. (Respondent's Exhibit 1) Ralph L. Stacey Jr., is a licensed nursing home administrator in the States of Ohio, Kentucky and Florida. He has been licensed in Kentucky and Florida since 1974. At the time of Mr. Bavetta's visit and inspection during July, 1986, Ralph Stacey, Jr., was in Cincinnati, Ohio preparing the payroll for Stacey Health Care Centers. During this time period, Ralph Stacey, Jr., served as the administrator for the subject facility, Riverside Care Center, and another facility in Kentucky and did not have a qualified assistant administrator employed to act in his absence. However, once Mr. Bavetta issued his recommendation for sanctions, Petitioner, as part of its plan of correction, has employed a licensed administrator who is presently on staff and serves as Riverside's assistant administrator during the administrator's absence.
Recommendation Based on the foregoing findings of fact and conclusions of lawn it is RECOMMENDED: The Department of Health and Rehabilitative Services enter a Final Order imposing an administrative fine in the amount of One Thousand Dollars ($1,000.00) upon Stacey Health Care Centers- Inc., d/b/a Riverside Care Center, which amount shall be payable to Respondent within thirty (30) days after entry of Respondent's Final Order. RECOMMENDED this 18th day of September, 1987, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of September, 1987. COPIES FURNISHED: Kenneth S. Handmaker, Esquire MIDDLETON & REUTLINGER 2500 Brown & Williamson Tower Louisville, KY 40202-3410 Leonard T. Helfand, Esquire Office of Licensure and Certification Department of Health and Rehabilitative Services 5190 Northwest 167th Street Miami, Florida 33014 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 R. S. Power, Esquire Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard -Building One, Room 407 Tallahassee, Florida 32399-0700
The Issue (1) Whether Respondent, Rockledge NH, L.L.C., d/b/a Rockledge Health and Rehabilitation Center, should be given a "Conditional" or "Standard" license effective February 12, 2002, or March 7, 2002; (2) Whether Respondent is subject to an administrative fine in the amount of $2,500.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing, the following findings of fact are made: Respondent operates a skilled nursing home located at 587 Barton Boulevard, Rockledge, Brevard County, Florida. Petitioner is the State of Florida agency responsible for licensure and regulation of nursing home facilities in Florida. Respondent was, at all times material to this matter, licensed by Petitioner and required to comply with applicable rules, regulations, and statutes, including Sections 415.1034 and 400.022, Florida Statutes. On or about March 7, 2002, Petitioner conducted a complaint survey of Respondent. Petitioner's surveys and pleadings assign numbers to residents in order to maintain the residents' privacy and confidentiality. The resident who was the subject of the Class II deficiency from the March 7, 2002, complaint survey has been identified as Resident number 1, with the initials "H.C." Resident number 1 is 82 years old and was admitted to Respondent's facility on January 19, 2002, with diagnoses of dementia, back pain from multiple falls, hypertension, osteoarthritis, recurrent bronchitis, and chronic obstructive pulmonary disease. At all times material to this matter, Resident number 1 was a "vulnerable adult" as defined in Subsection 415.102(26), Florida Statutes. On February 5, 2002, at approximately 9:50 p.m., a certified nursing assistant employed by Respondent went into Resident number 1's room to see why Resident number 1 was yelling. Upon entering the room, the certified nursing assistant found Resident number 1's bed positioned in such a way that his head was down and his feet were up. A blanket had been tied across the "up" end of the bed securing Resident number 1's feet allowing him to be held in a "head down" position. The certified nursing assistant who investigated the yelling "pulled on the blanket to verify that it was tied down." There were no prescriptions or written orders justifying the restraint of Resident number 1. The certified nursing assistant who found Resident number 1 in the above-described position identified a different certified nursing assistant, one provided to Respondent by a staffing agency, as the caregiver for the shift in question. The alleged abusive act was perpetrated by the certified nursing assistant provided by the staffing agency. The certified nursing assistant provided by the staffing agency placed Resident number 1 in a position that was contraindicated for a person with a diagnosis of chronic obstructive pulmonary disease. Respondent's certified nursing assistant waited approximately two days before reporting the alleged abusive act to the abuse hotline, Respondent's abuse coordinator or the Director of Nursing. A medical record review indicated that Resident number 1 was sent to the hospital on February 22, 2002, for shortness of breath and again on February 26, 2002, for difficulty in breathing and lung congestion. The History and Physical from the hospital, dated February 23, 2002, revealed that Resident number 1 was sent to the hospital because of progressive shortness of breath. Resident number 1's lower extremities were documented to have been severely edematous with "skin changes subsequent to chronic stasis and edema with excoriation, loss of circulation, blisters, etc." The certified nursing assistant provided by the staffing agency had a full resident assignment and cared for several residents the day of the alleged abusive act. After the discovery of the alleged abuse, the certified nursing assistant provided by the staffing agency continued to care for Resident number 1 and other residents assigned to her for approximately one hour or until the end of her shift. Documentation, dated March 8, 2002, from the staffing agency, confirmed that the certified nursing assistant provided by the staffing agency did have education in the current rules and regulations related to the abuse and neglect of the elderly. Petitioner's surveyor believed that the failure to immediately report the alleged abuse constituted a Class II deficiency because the certified nursing assistant provided by the staffing agency was allowed to continue to care for Resident number 1 and other residents until the shift ended and could have further abused Resident number 1 or other residents in her care.
Recommendation Based on the Foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Administrative Complaints in this matter be dismissed and Respondent's licensure status be returned to Standard for the period it was Conditional and that no administrative fine be levied. DONE AND ENTERED this 18th day of February, 2003, in Tallahassee, Leon County, Florida. JEFF B. CLARK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of February, 2003. COPIES FURNISHED: Joanna Daniels, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Alex Finch, Esquire Goldsmith, Grout & Lewis, P.A. 2180 North Park Avenue, Suite 100 Post Office Box 2011 Winter Park, Florida 32790-2011 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED That Manor Care be issued a CON for the construction of a 60 bed nursing home; Palm Bay Care Center be awarded a CON for the construction of a 60 bed nursing home; Forum Group be awarded a CON for a 40 bed nursing home and Courtenay Springs be awarded a CON for 36 nursing home beds. RECOMMENDED this 26th day of January, 1987, at Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-99675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of January, 1987. COPIES FURNISHED: William Page, Jr., Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 Jean Laramore, Esquire Kenneth Hoffman, Esquire 325 North Calhoun Street Tallahassee, Florida 32301 Thomas B. Smith, Esquire Post Office Box 633 Orlando, Florida 32802 John Grout, Esquire Post Office Box 180 Orlando, Florida 32802 Donna H. Stinson, Esquire Suite 100 Perkins House 118 North Gadsden Street Tallahassee, Florida 32301 Susan G. Tuttle, Esquire 402 South Florida Avenue Tampa, Florida 33602 Robert D. Newell, Jr., Esquire Suite B 200 South Monroe Street Tallahassee, Florida 32301 John F. Gilroy, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 APPENDIX The following constitutes my specific rulings pursuant to Section 120.57(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties herein. 1-13 Accepted. 14 & 15 Accepted. 16-18 Rejected as a recitation of the evidence. 19-23 Accepted. 24 Accepted. 25-29 Accepted. 30 & 31 Accepted. 32 Irrelevant. 33-34 Accepted. 35-37 Accepted. 38-46 Accepted. 47 & 48 Accepted. 49 & 50 Accepted. 51 Discussion, not Finding of Fact. 52-56 Accepted. Rejected as a recitation of the evidence. Accepted. Accepted to the fact that there were no sheltered beds in existence. Irrelevant. 61-63 Accepted but not of substantial positive value. 64 & 65 Accepted. Opinion not Finding of Fact. Accepted. 68-75 Accepted. 76-80 Irrelevant based on part operation and evidence shows facility is to be sold. 81-85 Irrelevant - see next 86-90 Rejected as a conclusion of law and not a Finding of Fact. 91 Not a Finding of Fact. 92-94 Accepted. 95 Irrelevant as to local district. 96-103 Accepted. 104-105 Rejected as contrary to the weight of the evidence. Accepted as to what Dr. Hoffman supported. Accepted as to what Dr. Hoffman indicated. 108-110 Accepted. Rejected as contrary to the weight of the evidence. Accepted. Not a Finding of Fact. 114-118 Accepted. 119&120 Not a Finding of Fact. 121&122 Accepted. 123 Accepted as to the one facility currently operated. 124-127 Accepted. Speculation insufficient to support a Finding of Fact. Argument, not a Finding of Fact. Accepted. 131-133 Accepted. 134 Not a Finding of Fact. 135-137 Accepted. 138 Not supported by the weight of the evidence. 139-147 Accepted. 148&149 Not a Finding of Fact. 150-164 Accepted. Rejected as a summary of testimony, not a Finding of Fact. Irrelevant. 167-176 Accepted. Rejected as contrary to the weight of the evidence Rejected as a summary of testimony. Accepted. 180&181 Accepted. 182 Irrelevant. 183&184 Accepted. 185 Rejected as a conclusion. 186&187 Rejected as contrary to the weight of the evidence. As to Manor Care 1 Accepted. 2&3 Rejected as not a part of the case. 4 Accepted. 5-7 Accepted. Accepted. Accepted. 10-11 Accepted. 12 Accepted. 13-19 Accepted. 20-22 Accepted. As to Forum 1-13 Accepted. 14-16 Accepted. 17-22 Accepted. 23&24 Accepted. 25-27 Accepted. 28-31 Accepted. 32 Accepted. 33-35 Accepted. 36 Rejected as speculation. 37-42 Accepted. 43 Accepted. 44-47 Accepted. 48&49 Accepted. 50-55 Accepted. Rejected as a conclusion not consistent with the evidence. Accepted. 58&59 Accepted. 60-64 Accepted. 65-69 Accepted. 70&71 Irrelevant. 72&73 Accepted. 74-76 Accepted. Accepted as to the first sentence. Second sentence is not a Finding of Fact. Accepted. As to PBCC 1&2 Accepted. 3 Rejected as a Conclusion of Law. 46 Accepted. Accepted. Rejected as contrary to the weight of the evidence. Accepted. 10-12 Accepted. Rejected as contrary to the weight of the evidence except for the first sentence which is accepted. Rejected. 15-20 Accepted. 21-27 Accepted. 28 Rejected as an overstatement and not supported by the evidence. 29&30 Accepted. 31 Rejected as contrary to the weight of the evidence. 32-38 Accepted. 39-43 Accepted. 44-50 Accepted. 51-57 Accepted. Accepted except for the first sentence which is unsupported by credible evidence of record. Accepted. Rejected. Accepted. As to Courtenay This party failed to number or otherwise identify its Findings of Fact individually. Therefore, no specific ruling as to each Finding of Fact is hereby made. In light of the ultimate recommendation of the Hearing Officer that the party's CON be approved, no prejudice to this party can be said to have occurred. As to DHRS 1-4 Accepted 5 Summary of testimony and not a Finding of Fact. 6-1 Is an argument of the party's position, not a Finding of Fact. 12-14 Rejected as matters not a part of the party's position at hearing. Accepted. Accepted. Accepted. Accepted. 19-22 Accepted. Rejected as a summary of testimony and not a Finding of Fact. Accepted. 25-28 Accepted. 29-31 Accepted.
The Issue Whether Petitioners' applications for Certificates of Need should be approved?
Findings Of Fact Ocala Ocala is a general partnership composed of three partners: Ocala Health Care Associates, Inc., Casterfield, Ltd., and Big Sun Healthcare Systems, the lessee and operator of Munroe Regional Medical Center. Ocala is the current holder of an approved CON for 35 community beds in Marion County. If the 21-bed transfer of sheltered beds to community beds is approved, Ocala intends to operate a 56-bed facility. A 56-bed facility is more viable than a 35-bed facility. At the time of the hearing, there were 642 approved and licensed beds and 215 approved not yet licensed beds in Marion County. The 215 beds include Ocala's 35-bed CON. A patient needing subacute care is one who has been released from acute care status by a physician and is ready to be released from a hospital (acute care) to a less costly facility, e.g. a skilled nursing home. Subacute care patients are those needing, e.g., intravenous tubes, respirators, IV medication, decubitus ulcer care, tracheotomy tubes, or antibiotic therapy. Patients needing subacute care should be placed in a nursing home, since this is less costly than hospital care and it allows for acute care beds in a hospital to be used for patients needing acute care. Skilled nursing homes are authorized to provide subacute care, but are not required to do so. In order to provide subacute care, a nursing home may need additional staff and equipment. There is a problem in Marion County with the placement of subacute care patients in nursing homes. This problem is caused by a variety of factors and usually results in a patient remaining in a hospital longer than is necessary. One factor is that some of the existing nursing homes will not accept patients needing certain types of subacute care, e.g., patients needing ventilators or feeding tubes. Another equally important factor is that the nursing homes want to make sure they will get paid and there is usually some delay in determining how the nursing home will be compensated. Other factors include the patients inability to pay and, on occasion, the unavailability of beds. Ocala intends to use its 35-bed approved CON to provide subacute care. Country Club While the application shows the applicant's name as "Country Club Retirement Center," that is the name of the project. The applicant is Mr. J. E. Holland. Mr. Holland's application is for a 60-bed nursing home which will be part of a 250-apartment continuing care community. The facility is to be located in Clermont, in Lake County. Lake County is in Planning Area VII of HRS District III. Planning Area VII also includes Sumter County. Mr. Keach, the only witness presented by Country Club, is Vice President of National Health Care. National Health Care operates a nursing home in Gainesville, Florida. In addition to operating the nursing home, National Health Care assists persons seeking a CON with preparation of the CON application. Mr. Keach and other National Health Care employees assisted Mr. Holland with the preparation of the CON application submitted in this case. National Health Care will not own or operate Mr. Holland's facility. Mr. Keach is of the opinion that there is need in Clermont for a 60- bed nursing home. He bases his opinion on letters of support for the construction of the facility, on petitions signed by persons attending a public hearing, and on four or five visits to the area. Mr. Keach never performed a study which would indicate the number of persons with a "documented need" for nursing home services who have been denied access to a nursing home. At the time HRS issued its State Agency Action Report there were 958 beds approved and licensed in Planning Area VII. Of these, 838 are located in Lake County, with 142 located in a nursing home in Clermont. Also these are swing-beds providing long-term care at a hospital in Clermont. Finally, there were 236 beds approved not yet licensed in Planning Area VII, with 176 to be located in Lake County. The occupancy rate for the nursing home facility located in Clermont is approximately 89 percent. For the six months ending March, 1988, the occupancy rate for Planning Area VII was below 80 percent. There are at least two nursing homes in operation within a 20-mile radius of Clermont. These two nursing homes are located in Winter Garden and one of them has received a CON to add 89 beds. Twenty-Eight Corporation The applicant in this case is Twenty-Eight Corporation. "The owner of the nursing home will be the Levy Nursing Care Center, a limited partnership, which will be owned and secured by Twenty-Eight Corporation." (28 Corporation, Composite Exhibit 1.) Twenty-Eight corporation seeks approval of a CON for 60 nursing home beds to be operated as part of a continuing care project which will include a 50-unit apartment complex. The facility is to be located in Chiefland, Florida, in Levy County. Levy County is in Planning Area II of HRS District III. Planning Area II also includes Alachua, Gilchrist and Dixie counties. At the time HRS issued its State Agency Action Report, there were 1112 licensed nursing home beds in Planning Area II. Of these, 120 are located in Trenton, in Gilchrist County, 180 are located in Williston, in Levy County, and the rest are located in Alachua County. Also, there are 147 beds approved not yet licensed to be located in Alachua County. Chiefland is approximately 12 miles from Trenton. Williston is approximately 27 miles from Trenton. Mr. Keach was the only witness who testified on behalf of Twenty-Eight Corporation. Mr. Keach is vice-president of National Health Care. (See Finding of Fact 17, supra.) Mr. Keach is of the opinion that there is need in the Chiefland area for a 60-bed nursing home. His opinion is based on letters of support and petitions of support he received for the project. Also, his opinion is based on the fact that there is no nursing home located in Chiefland and the nearest nursing home is located in Trenton, 12 miles away. The 1986 District III Health Plan shows the Trenton facility having an occupancy rate of 99.93 percent. Mr. Keach never performed a study which would indicate the number of persons with a "documented need" for nursing home services who have been denied access to a nursing home.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that HRS enter a Final Order denying Petitioners' applications in these three cases. DONE and ENTERED this 3rd day of March, 1989, in Tallahassee, Leon County, Florida. JOSE A. DIEZ-ARGUELLES Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of March, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 88-1862, 88-1863, 88-1864 Rulings on Proposed Findings of Fact Ocala's Proposed Findings of Fact: 1. Accepted. 2-4. Supported by competent, substantial evidence but unnecessary to the decision reached. 5-7. Accepted. Irrelevant. Accepted. Rejected as not supported by the weight of the evidence. There is not an absolute absence of facilities willing to accept all patients needing subacute care. Irrelevant. "Serious concerns" are not what is needed under the Rule. First sentence rejected as recitation of testimony. Second sentence irrelevant; issue is whether nursing homes will accept patients, not whether nursing homes will enter into agreement with MRMC. 13-16. True, but irrelevant. Accepted. (a) Rejected to the extent it implies that the approved facilities would not provide subacute care. Mr. Bailey's testimony is that the facilities refused to enter into a relationship with MRMC; this does not establish that the facilities would not provide subacute care. Rejected as a recitation of testimony. The weight of the evidence shows that some facilities would accept same subacute patients. True, but it is unclear if these are the physician's notations the HRS witness referred to. True that charts and logs were provided, but they did not establish the number of patients in need of subacute care in excess of licensed or approved beds. 19-26. Irrelevant. 27-29. Accepted-for what they are, but insufficient to establish need. Twenty-Eight Corporation's Proposed Findings of Fact: 1-4 Accepted. Irrelevant. This is a de novo proceeding. True, but irrelevant. Accepted. Accepted. Rejected as hearsay. But see Finding of Fact 31. Mr. Keach testified that Chiefland is 40 miles from Williston. The road map published by the Department of Transportation shows the distance between the two cities at 27 miles. True, but irrelevant. True, but irrelevant. Accepted. Accepted. However, this special consideration should be given only where numeric need has been established in the District. True, but irrelevant. True, but irrelevant. Rejected as hearsay. True, but irrelevant. Rejected as hearsay. Also, a determination by a family member does not establish medical "need". True that this is Mr. Keach's opinion. However, Mr. Keach's opinion is rejected. His opinion of need is not based on what the Rule requires or on what health planners rely on to establish need. Mr. Keach is not able to testify as to the financial feasibility of the facility because he has no first- hand knowledge of the finances. 21-22. Irrelevant. 23. Rejected. See ruling on 10., supra. 24-26. Irrelevant. Rejected as contrary to the weight of the evidence. Irrelevant. Irrelevant; this is not a rule challenge. Irrelevant. True, but irrelevant. Irrelevant. Accepted. Rejected as hearsay. Rejected as not supported by the weight of the evidence. Rejected as argument. Also, unable to determine what the "second portion" is. 37-38. Irrelevant. First phrase accepted. Second phrase rejected to extent implies that only need to show that no other facility exists within 20 miles. Irrelevant. Country Club's Proposed Findings of Fact: 1-4. Accepted. Irrelevant. This is a de novo proceeding. True, but irrelevant. Accepted. Irrelevant. True, but irrelevant. Accepted. Accepted. However, this special consideration should be given only where numeric need has been established in the District. True, but irrelevant. True, but irrelevant. 14-17. Irrelevant. Rejected as contrary to the weight of the evidence. Accepted. Rejected as not supported by competent evidence; hearsay. Accepted. Rejected as not supported by competent evidence; hearsay. Irrelevant. Rejected as not supported by competent evidence; hearsay. True, but irrelevant. See ruling on 11, supra. Irrelevant. Rejected as not supported by competent evidence; hearsay. Irrelevant. The Rule also recognizes this. Irrelevant. Rejected as not supported by the weight of the evidence and irrelevant. True, but irrelevant. True, but irrelevant. 33-34. True, but irrelevant. This is a de novo proceeding. 35-39. Irrelevant. 40. Rejected as argument. Also, unable to determine what the "second portion" is. 41-42. Accepted 43. Rejected as contrary to the weight of the evidence. 44. True, but irrelevant. Also, there are approved beds within 20 miles, but located in a different HRS District. Leesburg's Proposed Findings of Fact 1-7. Accepted. Rejected as not a finding of fact. Accepted. 10-15. See Conclusions of Law section of RO. Accepted. Rejected as argument. Accepted. Rejected. Fact that need does not exist under HRS rule doesn't necessarily mean that that facility will not be financially feasible. In any event, Country Club was not able to establish financial feasibility. 20-21. See Conclusions of Law. 22. Rejected as argument. 23-28. Supported by competent substantial evidence but unnecessary to the decision reached. Accepted. Rejected as a recitation of testimony. Accepted.- HRS's Proposed Findings of Fact 1-19. Accepted. Rejected. The HRS witness did not specifically state that HRS needs to see the actual physician referral. Accepted. See Conclusions of Law. 22-28. Accepted. See Conclusions of Law. 29. Not a finding of fact. 30-37. Accepted. 38. Irrelevant. 39-42. Unnecessary to the decision reached. Irrelevant. Accepted. 45-46. See Conclusions of Law. Accepted. Accepted. Not a finding of fact. 50-65. Accepted. See Conclusions of Law. 66. Not a finding of fact. 67-71. Accepted, but Ocala's Exhibits 6 & 7 are not amendments to the application but simply more of the same information that was provided with the application. COPIES FURNISHED: Gerald B. Sternstein, Esquire Darrell White, Esquire Post Office Box 2174 First Florida Bank Building Suite 600 215 South Monroe Street Tallahassee, Florida 32301 Theodore Mack, Esquire Assistant General Counsel 2727 Mahan Drive Fort Knox Executive Center Tallahassee, Florida 32308 R. Bruce McKibben, Jr., Esquire 307 West Park Avenue Post Office Box 10651 Tallahassee, Florida 32302 Grafton Wilson, II, Esquire 711 NW 23rd Avenue, Suite #4 Gainesville, Florida 32609 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, as well as the stipulation of facts "entered into by all parties, the following relevant facts are found: Along with six other applicants, the petitioner, Health Quest Corporation, d/b/a Lake Pointe Woods Health Center, and the respondent, Quality Health Facilities, Inc., d/b/a Sarasota Health Care Center, submitted applications for a Certificate of Need to construct and operate new nursing homes in Sarasota County, In June of 1982, the respondent Department of Health and Rehabilitative Services (HRS) determined to issue the application of Sarasota Health Care Center and deny the remaining seven applications. For the purposes of this proceeding, the parties have stipulated that there is a need for at least a 120-bed skilled and intermediate care nursing home in the Sarasota, Florida area. In November, 1982, respondent HRS adopted Rule 10- 5.11(21) , Florida Administrative Code, which provides a formula methodology for determining the number of nursing home beds needed in areas throughout the State. Briefly summarizing, this formula begins with a bed to population ratio of 27 per thousand population age 65 and over, and then modifies that ratio by applying a poverty ratio calculated for each district. The theoretical bed need ratio established for Sarasota County by this portion of the Rule's formula is 23.2 nursing home beds per thousand elderly population projected three years into the future. The population figures to be utilized in the formula are the latest mid-range projections published by the Bureau of Economic and Business Research (BEBR) at the University of Florida. After determining the theoretical need for nursing home beds in an area, the Rule purports to determine the actual demand for beds by determining the current utilization of licensed community nursing home beds, establishing a current utilization threshold and, if this is satisfied, applying a prospective utilization test too determine the number of beds at any given time. Applying the formula methodology set forth in Rule 10- 5.11(21) to Sarasota County results in a finding that there are currently 807 excess nursing home beds in that County. The need for sheltered nursing home beds within a life care facility are considered separately in Rule 10-5.11(22), Florida Administrative Code. Generally speaking, need is determined on the basis of one nursing home bed for every four residential units in the life care facility. Elderly persons 75 years of age and older utilize nursing homes to a greater extent than those persons between the ages of 65 and 74. Persons under the age of 65, particularly handicapped individuals, also utilize nursing home beds. The formula set forth in Rule 10-5.11(21) does not consider those individuals under the age of 65, and it does not provide a weighted factor for the age 75 and over population. In the past, the BEBR mid-range population projections for Sarasota County, compared with the actual census reached, have been low. Petitioner Health Quest, an Indiana corporation, currently owns and/or operates some 2,400 existing nursing home beds in approximately 13 facilities in Indiana. It holds several Certificates of Need for nursing homes in Florida and construction is under way. Petitioner owns 53 acres of land on the South Tamiami Trail in Sarasota, upon which it is constructing a 474-unit retirement center. It seeks to construct on six of the 53 acres a 120-bed nursing home adjacent to the retirement center. Of the 120 beds, it is proposed that 60 will be for intermediate care and 60 will be for skilled care. The facility will offer ancillary services in the areas of speech, hearing, physical, occupational, and recreational therapy. Thirty-five intermediate care beds would be classified as beds to be used for Medicaid recipients and the facility would be Medicare certified. Retirement center residents will have priority over nursing home beds. The total capital expenditure for the petitioner's proposed nursing home project was estimated in its application to be $3.1 million, with a cost per square foot of $46.29 and a cost per bed of approximately $26,000,00. As of the date of the hearing, the estimated capital expenditure for the petitioner's project as $3.9 million. The respondent Quality Health Facilities, Inc., d/b/a Sarasota Health Care Center (QHF), is a Mississippi corporation and owns nursing homes in Tennessee, North Carolina and Haines City, Florida, the latter site having been opened in August of 1983. It also holds three other outstanding Certificates of Need. QHF proposes to construct a 120-bed nursing home containing intermediate and skilled care beds which will be equally available to all members of the community. It is anticipated that it will have approximately 65 percent Medicaid usage and 5 percent Medicare usage. Though it has not yet selected its site, QHF plans to utilize a four-acre site near the City of Venice in Sarasota County. At the time of the application, the total capital expenditure for QHF's proposed project was estimated to be $2.3 million. Its construction costs were estimated at $1.16 million or $33.14 per square foot. QHF's recently constructed Haines City nursing home facility was completed at a construction cost of $1.22 million, or $31.00, per square foot. The Sarasota County facility will utilize the same basic design as the Haines City facility. At the current time, the cost of construction would be increased by an inflation factor of about ten percent. As of the date of the hearing, the projected capital expenditure for QHF's Sarasota County proposed facility was approximately $2.6 million or about $21,000.00 per bed. The owners of QHF are willing and able to supply the necessary working capital to make the proposed nursing home a viable operation. As depicted by the projected interest and depreciation expenses, the QHF facility will have lower operating expenses than the facility proposed by petitioner, Health Quest. In Sarasota County, there is a direct correlation between high Medicaid utilization and high facility occupancy. The long term financial feasibility of a 120-bed nursing home in Sarasota County is undisputed, as is the availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization and adequacy of like and existing services in the health service area.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the application of Health Quest Corporation d/b/a Lake Pointe Woods Health Care, Inc. for a Certificate of Need to construct a 120-bed nursing home in Sarasota County be DENIED. It is further RECOMMENDED that the application of Quality Health Facilities Inc. d/b/a Sarasota Health Care Center for a Certificate of Need to construct a 120-bed nursing home facility in Sarasota County be GRANTED. Respectfully submitted and entered this 31st Day of October, 1983, 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 31st day of October, 1983. COPIES FURNISHED: John M. Laird, Esquire 315 West Jefferson Blvd. South Bend, Indiana 46601 John T. C. Low, Esquire Paul L. Gunn, Esquire Low & McMullan 1530 Capital Towers Post Office Box 22966 Jackson, Mississippi 39205 James M. Barclay, Esquire Assistant General Counsel 1317 Winewood Blvd. Suite 256 Tallahassee, Florida 32301 David Pingree, Secretary Department of Health & Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32301
Findings Of Fact Originally, each Petitioner filed an application for a Certificate Of Need for the construction and operation of nursing home facilities in Broward County as follows: HCR - 120 beds, Richmond - 240 beds, Health Quest - 180 beds, and FPM - 240 beds. The applications were reviewed by Respondent comparatively and competitively, and they were denied in a State Agency Action Report on August 12, 1982 solely on the basis that there was no need for additional nursing home beds in Broward County. The formal hearing thereafter requested by all Petitioners was continued several times due to scheduling conflicts and due to the expected promulgation of a new methodology by which the need for nursing home beds is computed. As a result of Respondent's Quarterly Census Report dated November 30, 1983, Respondent determined that in fact there was a need for an additional 101 nursing home beds in Broward County. Accordingly, just prior to the formal hearing and by letter dated January 4, 1984, Respondent's attorney invited each Petitioner to amend its application for the purpose of being eligible to receive a Certificate Of Need for those 101 beds. Each Petitioner so complied. At the final hearing, each Petitioner proceeded on both its original application and its amended application. In spite of the singular ground for denial of each application contained in the State Agency Action Report, Respondent's attorney contended from the inception of this proceeding and into the final hearing that whether any of the applications met all statutory and rule criteria for approval was disputed by Respondent, including the financial feasibility of each proposed project. According to Respondent's only witness, Thomas F. Porter, however, all four applications meet all statutory and rule criteria for approval including financial feasibility. Accordingly, the only facts to be determined herein will relate to the issue of the number of beds needed. Since Respondent stipulated that 101 beds were available to be awarded to one of the applicants in this proceeding (Tr. 17, 36-40, 952), the threshold issue is how many beds in excess of 101, if any, are needed in Broward County. Respondent uses the most recently available information in analyzing applications for nursing home beds, including the Quarterly Census Report which it publishes, and a mathematical methodology contained in Section 10-5.11(21), Florida Administrative Code, the purpose of which methodology is to project the need for nursing home beds on a three year basis to determine the availability of those beds for award to Certificate Of Need applicants in relation to a projected need. The methodology contains several steps. The first part of the methodology projects the number of beds that will be needed based upon an adjustment of a standard of 27 beds per thousand for the population aged 65 and over to reflect the percentage of those in poverty in the HRS district in relation to those living in poverty in the state. The second part of the methodology contains the present and prospective occupancy rates. Before any of the new beds which are determined to be needed can be added, the average occupancy rate for existing homes must exceed eighty five Percent (85), as the rule is applied to Broward County, the only county in Florida constituting its own HRS district and having no sub-districts. Furthermore, the second part of the formula provides that no additional beds which have been determined to be needed can actually be added if, theoretically, the prospective occupancy rate after the beds are added will be reduced below eighty percent (80 percent). Respondent's determination as to the number of beds needed and the number of beds available for Certificate of Need applicants according to "part two" of the formula is based on its Quarterly Census Reports. The November 30, 1983 Quarterly Census Report revealed that 1,419 community nursing home beds (4,058 needed beds, less 2,789 existing and 300 previously approved but not constructed beds) will be needed in Broward county in 1986, the horizon year for these applicants. The occupancy rate of existing nursing home beds for the six months preceding that report was 91.5 percent. According to that report, since the prospective occupancy rate is 80 percent for Broward County, then the addition of more than 101 beds at the present time will theoretically reduce the prospective occupancy rate below 80 percent. Under normal circumstances Respondent will issue Certificates of Need in accordance with the need methodology set forth above. However, Respondent has discretion to approve applications for nursing home beds which do not conform to the need methodology if the existence of special circumstances can be proven. Special circumstances do exist in Broward County which warrant a determination that more nursing home beds are needed than is demonstrated by a strict application of Respondent's need methodology. One of those special circumstances is the existence in the district comprised of Broward County of an older population than in the other districts in Florida. Broward County's 65 and over population is fairly typical of Florida at the present time, but there is a significant difference in the proportion of the population which is 75 and over and which will be 75 and over in the near future. In 1980 Florida as a whole had 6.5 percent of its 65 and over population in the 75 and over category which was projected to increase to 9 percent by the year 2000. By contrast, according to studies performed by Dr. Robert Weller, in Broward County 35.4 percent of the 65 and over population was 75 and over, and by 1986 this number was projected to increase to 53.6 percent. This difference was classified by Dr. Weller as "very meaningful" to the point where he would be very "uncomfortable" with any attempt to plan for Broward County using statewide averages. This large difference in the composition of the elderly population of the state as a whole and Broward County is a significant special circumstance because the older the population the greater the demand for nursing home beds. In fact, the big predictors of need for nursing home beds are illness and age. The average age of entry into a nursing home is 81. While the population group of 85 and older utilize nursing home beds at a rate 15 times greater than the 65 and older group, the over 75 age category constitutes 70 percent of all nursing home users. Respondent's need methodology does not make an adjustment for differences in the 65 and over category between the various districts. This failure to adjust for an older population may not significantly affect districts with more normal population composition, but since Broward County's population departs substantially from the norm, it is an essential consideration. The failure to consider this situation results in a gross understatement of need in Broward County. Diagnostically Related Groups (hereinafter "DRG") regulations are amendments to the Social Security Act effective in 1983 which alter the method by which hospitals will receive reimbursement for Medicare patients. Under the DRG regulations, which hospitals are required to adhere to by the end of 1984, reimbursement for Medicare patients will be based upon an established length of stay for each type of illness. For example a hospital might be reimbursed for an eight day hospital stay for a coronary by-pass operation whether the patient actually stays in the hospital for seven or for 12 days. The effect of the DRG regulations is the earlier discharge of many patients in need of intensive nursing care. Every expert witness and professional administrator opined at the hearing in this cause that DRG regulations will result in an increased demand for nursing home beds. In addition to the effect the DRG regulations will have in a normal situation, the characteristics of the Broward County will accentuate this effect. The nationwide average for percent of Medicare funding in acute care hospitals is approximately 50 percent while the average for Broward County in last 12 months ranges from 53 percent to about 64 percent. The characteristics of Broward's elderly population also increases the effect of the DRG regulations because the population in Broward County is older than that in the remainder of the state. A study of the effects of the DRG regulations on the need for additional nursing home beds was recently conducted for Palm Beach County. That county has a high percentage of elderly (although not as high as Broward) and a high percentage of Medicaid funding. That study indicated that the DRG regulations would increase demand there by about 225 to 300 beds. Theodore J. Foti, an expert in health planning, utilized the Palm Beach study to estimate that from 325 to 400 additional beds are needed in Broward County to compensate for the DRG regulations alone. In Broward County there are three facilities which Respondent counts as nursing home facilities but which do not provide nursing home services. The Daystar Nursing Home, which contains 44 beds, is a Christian Science facility which does not provide the level of care associated with nursing homes. The Manor Oaks facility, which contains 116 beds, has a hospital license as an extended care facility and is a licensed specialty hospital, not a nursing home. St. Johns Nursing and Rehabilitation Center, which contains 100 beds, is a specialty hospital. Respondent includes the 340 beds in these facilities in computing the total of existing nursing home beds. Since these facilities are not truly nursing homes, they are displacing beds which normally provide nursing home services. The need methodology, therefore, does not include the true number of existing nursing home beds in Broward County, and, therefore, even if all other data used in the methodology be accurate, the bed need as determined by the methodology is understated by 340 beds. Barbara Palmer is employed by Respondent in its Office of Aging and Adult Services. Her job duties include writing proposed rules, manual material and legislative budget requests for Respondent's program known as Community Care for the Elderly (hereinafter "CCE"). CCE services include case management as well as CORE services, adult day care, chore, emergency alert response systems, home delivered meals, home health aid, medical transportation and personal care. Each of these programs is generally designed to provide services to the clients in the client's home. None of these services are provided to persons who are already in nursing homes. In order to compute need for CCE services, Palmer and Respondent rely on research by Dr. Carter Osterbind which identifies the incidence of "homebound" and "bedfast" individuals in the population aged 65 and over. Respondent defines bedfast as a person who, because of physical or other infirmities, remains in bed and is incapable of being in any other place. Similarly homebound individuals are those who cannot leave their homes without assistance. Respondent routinely uses Osterbind's 8 percent incidence factor to calculate the percentage of the population in the State of Florida 65 and over that can be characterized as homebound and bedfast. Subject to revisions, Palmer prepares the budget proposal for Aging and Adult Services which is then approved by the Secretary of the Department of Health and Rehabilitative Services for submission to the Governor and which then becomes Services for part of the Governor's budget request which is ultimately submitted to the Legislature. Palmer uses two documents to prepare her budget request: Dr. Osterbind's paper "Older People in Florida" and "Florida Decade of the 80's", a technical appendix provided by the Office of the Governor as a reference for population statistics for use in developing legislative budget requests. Using these two documents, a projected need is compared with the historical data of how many people have been served with the money which was received in a previous budget year. By subtracting the historically met need from the projected need, Palmer arrives at the projected unmet need, which is presented in a table depicting the total number of homebound and bedfast clients who will not receive services. Palmer also uses a factor, developed by Respondent's Community Care for the Elderly Program, to determine how many individuals, but for the fact that their need is going to be met, are at risk of institutionalization. Respondent's Office of Evaluation has developed and published a 42 percent factor and utilizes it as a basis to determine how many of those persons in a category whose needs will be unmet because of lack of budget dollars in the future will actually end up in nursing homes if more dollars are not appropriated. In other words, Respondent utilizes a document promulgated in 1981 by its Office of Evaluation which indicates that a 42 percent factor should be applied to an 8 percent statewide percent of the population 65 and older to determine how many are at risk of institutionalization in a nursing home, and this methodology has been used routinely by Respondent to prepare Respondent's budget requests through 1985. Palmer's approach in preparing the budget request has a purpose of persuading the Legislature that unless money is provided, 42 of all homebound and bedfast individuals will have to be institutionalized but for provision for home health care services. Palmer's last budget request shows that in the decade of the 80's Respondent expects a 69.8 percent increase in the population group 65 and over. The 10 year plan for CCE and CORE services gives the estimated percentage of need which Respondent intends to meet with CCE and CORE services for various budget years through 1990. Respondent will only provide those services to 23.84 percent of those persons needing them in 1985-86 and only 26.48 percent in 1986-87. Estimated unduplicated clients that will be served in those same years are 41,448 and 47,869 respectively. Expert witness, Michael Schwartz, used Respondent's population figures for Broward County and Respondent's methodology according to Palmer to determine how many of those individuals aged 65 and over in Broward County will be homebound and bedfast in the planning horizon year of 1986. Multiplying the number of homebound and bedfast by the percentile of persons that are at risk of institutionalization yields the figure of 9,760 persons for the horizon year. The number of persons projected by Respondent's Office of Aging and Adult Services to actually receive the CCE-CORE services in that horizon year is 3,956. Thus, the number of individuals unable to obtain those services and needing a nursing home bed in that year will be 5,802. These people will need nursing home beds for an average length of stay of two and one-half years (national average). The current inventory of nursing home beds in Broward County, including approved but not built beds, is 3,089. When the existing inventory is subtracted from the number of needed beds, as computed by the Aging and Adult Services methodology, the net need is an additional 2,715. Thus, when Respondent's methodology for determining the need for nursing home beds in the absence of alternatives of CCE and CORE services is applied to Broward County for the year 1986, it yields a need for 2,715 beds in addition to existing and approved beds to accommodate the homebound and bedfast who will not receive those services. However, when Respondent's methodology in Section 10-5.11(21), Florida Administrative Code, is applied to Broward County for the year 1986 it yields a need for 1,419 beds in addition to existing and approved beds. Yet, when the theoretical prospective occupancy feature contained in that rule is applied to Broward County, only 101 beds are needed to be built in time for service in 1986. It is noteworthy that the formula used by Respondent to induce the Legislature to fund programs for the diversion of the elderly from nursing homes yields double the need for nursing home beds in Broward County in 1986 than use of the formula established by Respondent to evaluate applications for new nursing home beds. Schwartz identified the reason for the difference: The CCE funding formula takes into account those below the poverty level as well as those above the poverty level in determining the number of people who are at risk of institutionalization unless CCE services are provided. However, Respondent's bed need methodology uses a poverty ratio (number of impoverished in the county relative to number of impoverished in the state) to adjust the statewide standard of 27 beds per thousand downward to 15.5 beds per thousand in Broward County. Since the first part of the bed need methodology only measures nursing home bed need for the impoverished (by adjusting 27 beds per one thousand by a poverty ratio) while the formula used by Aging and Adult Services contemplates all persons at risk of institutionalization, whether impoverished or not, and since the Aging and Adult Services methodology yields a higher need figure, tie difference between the two figures must represent the extent to which private pay patients (not impoverished) are using, and will continue to use, nursing home beds in Broward County to the exclusion of Medicaid patients. Utilizing the first part of the bed need methodology, Respondent has determined that Broward County will need a total of 4,508 beds in 1986 and that, when licensed and approved beds are subtracted, 1,419 additional beds will be needed. However, the second part of the methodology which purports to determine the prospective utilization of nursing home beds limits the number of beds which can be added to 101. The premise behind the prospective utilization test is that the addition of more than 101 beds will result in the occupancy rate for nursing homes in Broward County being reduced below 80 percent. Because of the particular situation existing in Broward County this premise is not valid. In November 1983, Richmond's newly-constructed Sunrise facility had 120 beds in service, but Respondent counted all 240 approved beds as being in service for determining its occupancy rate. These 240 beds were, therefore, occupied at a rate of 24.4 percent. In November 1982, the occupancy rate for nursing homes in Broward County was 89.8 percent, while a year later after including all 240 licensed beds in Richmond's Sunrise facility, the occupancy rate had only fallen 3 points to 86.7 percent. Expert witness Schwartz concludes that if 240 beds can be added In Broward County and only drop the occupancy rate from 89.8 percent to 86.7 percent, then certainly more than 101 beds can be added before the occupancy rate will drop below 80 percent. He further concludes that when One examines what actually happened in Broward County rather than what could theoretically happen, the prospective utilization test may well be a valid predictor of future occupancy rates under normal circumstances, but it fails to be in Broward County. Rather, Schwartz concluded that approximately 1,000 nursing home beds can be added in Broward County without lowering the occupancy rate below 80. Expert witness Theodore Foti explained the effect of Respondent's bed need methodology when applied to Broward County. The methodology is based on the premise that the only people who need nursing homes in Florida are the impoverished since the standard 27 beds per one thousand is adjusted only by the poverty ratio. However, nursing home providers prefer private patients because they pay more. In Broward County there are facilities that only accept private pay patients. The provider receives about 25 percent more profit than he would if he had two individuals to care for in the same room when the difference between private and semi-private rates and the decrease in staffing that is possible with the lesser number of patients are taken into consideration. Because of the shortage of supply and the ever-growing demand in Broward County, it is economically beneficial to a 60 bed nursing home for example to take 20 beds out of service and operate with 40 beds because the owner can increase the rates and lower the costs simultaneously. According to Foti, a review of the occupancy rates in Broward County shows that beds in certain facilities have been taken out of use over a period of time by those facilities. Those providers have chosen to serve primarily the private paying individual since it is to their financial benefit to do so. The corresponding result is that the demand for nursing home beds by the medicaid recipient cannot be satisfied because the private pay patient has "squeezed out" the Medicaid patient. The existence of this phenomena in Broward County rises to the level of an exceptional circumstance since Respondent uses a formula to prescribe prospective occupancy rates which are directly controlled by the number of beds that the existing owners place in service or take out of service. Considering the "private pay phenomena" in Broward County, and considering that the number of beds per 1,000 in Broward County is the lowest in the state, and considering that the number of beds per 1,000 in the state is the lowest in the country, Foti calculates a need currently in Broward County to be an additional 800 beds as a minimum figure even without considering the DRG regulations which clearly will accentuate that need. Respondent's witness Porter acknowledged that Respondent would look favorably upon applications for Certificates of Need for additional beds in an area where indications are that Medicaid patients are being denied access to beds although Respondent's bed need methodology simultaneously shows that no new beds are needed. He explained that as an extenuating circumstance if there is evidence that a particular population group is being denied access and that Respondent would look favorably upon applications proposing substantial Medicaid beds (such as those under consideration herein) if accessibility for Medicaid clients is limited. He further acknowledged that the Medicaid program office of the division of Adult and Aging Services would be an appropriate authority upon which he would rely in making such a determination. He further acknowledged that the accessibility to Medicaid beds would be increased in Broward County by issuing Certificates of Need with a Medicaid bed condition attached to them since the Medicaid utilization rate has been increasing in Broward County even though the total number of beds has remained constant. Lynn Raichelson as the supervisor of Respondent's Adult Payments Unit for Broward County is responsible for gathering data reflecting the number of people placed in Medicaid beds during the month in Broward County for Medicaid payment purposes. Both her reports admitted in evidence and her testimony at the final hearing noted an overall difficulty in finding placements in Broward County for Medicaid patients. Her reports indicate a number of entries where all Broward County and Dade County nursing homes were contacted but there were no nursing home beds available. The number of days for placement ranged from 23 to in excess of 83 days. Most of the patients were in acute care hospital beds while awaiting nursing home beds. Several health care professionals testified as to the actual need in Broward County as opposed to the projected need based upon Respondent's mathematical formula. One hospital administrator had no problem placing private pay patients but found that Medicaid placements are extremely difficult to make in Broward County. His hospital alone holds 8 to 12 patients on any given day who should have been discharged into a nursing home. The executive director of the North Broward Hospital District which encompasses three hospitals encounters difficulty in placing Medicaid and Medicare patients in nursing homes in Broward County since the nursing homes are at full operational occupancy. Approximately 25 percent of the patients discharged from hospitals in the District are referred to and placed in nursing homes. Of this 25 percent, the District encounters difficulty in placing 10 to 15 percent of the patients. The problems persist year round but are especially difficult during the winter "peak" season. Alan Mahar is the administrator of the Primary Health Care Division of the Health and Public Safety Department for Broward County. He was the supervisor of nursing home placement from 1975 to 1981 when Broward County was making nursing home placements. Between June 1981 and September 1983 he participated in a Medicaid demonstration project called Pentastar which was sponsored by Respondent's District 10 Aging and Adult Program Office. The purpose of the project was to determine if an alternative existed to keep persons out of nursing homes. An important part of the program was the identification of persons aged 60 and over who were potentially at risk of being placed into a nursing home within one year. Those enrolled in the program had to qualify for Medicaid payments. Although he expected he would need to interview approximately 300 to find 150 persons for the program, everyone he interviewed qualified. At the conclusion of the program, none of the persons who received services through pentastar were any less at risk than they were before those services commenced. Services under that program terminated in September 1983. Since Broward County does not have a publicly operated nursing home, Mahar experienced extreme difficulty in placing Medicaid patients and found that it frequently took weeks and sometimes months to find an available nursing home bed for a Medicaid patient. Mahar's opinion that there is not a sufficient number of beds available to Medicaid patients in Broward County is also based on his identification of the trend over the last three years he has been involved in auditing Medicaid matching funds. The money which Broward County has been paying for hospital care for Medicaid persons has almost doubled in the last three years, while the Medicaid match money for nursing home care has gone up only 15 or 20 percent during that same period. The poverty ratio included in Respondent's bed need formula results in an underestimation of bed need for wealthy counties such as Broward County where the majority of nursing home patients are private pay patients. Broward County is the wealthiest county in the state and has the lowest Medicaid usage in the state. The poverty ratio results in a calculated bed-need ratio in Broward County of 15.5 beds per thousand whereas the statewide need ratio is 27 beds per thousand. There is overwhelming competent substantial evidence to show an actual need for community nursing home beds in Broward County currently and in 1986 for in excess of the 780 beds Petitioners collectively seek herein. Substantial competent evidence was presented to show several special circumstances, and respondent's sole witness acknowledged that one of those was sufficient for the grant of all applications filed by the four Petitioners in this cause. The overwhelming need proven herein was uncontroverted by Respondent, and the special circumstances prohibit Respondent from applying the bed need methodology in Broward County at this time. In view of the overwhelming and uncontroverted evidence, there is no need to determine which of the applicants herein is best qualified for the award of the 101 beds in issue in this cause. Additionally, the evidence in this record is insufficient to proclaim any of the applicants to be best qualified. At the final hearing there were a few attempts at a comparative analysis, and none was credible. The attempts at comparative analysis simply resulted in a further substantiation of the fact that all of the applicants are equally qualified. Respondent's witness gave his personal opinion that one of the applicants was preferable but was unable to assign any weight to any of the factors utilized in reaching that individual opinion. Rather, the one factor that he did testify to at length in the hearing as the most important - accessibility by Medicaid patients - was the one item that that applicant would not guarantee. HCR's application for the 101 beds indicated that it would not commit to the number of Medicaid patients that it would serve. In short, the testimony at the hearing and the evidence presented provide very little basis, if any, for choosing one applicant over another. Rather, all applicants meet all criteria, and the need for the number of beds originally requested clearly exists.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law it is recommended that a Final Order be entered: Granting to Richmond Healthcare, Inc. a Certificate of Need for 240 beds in Broward County in accordance with its original application; Granting to Health Care and Retirement Corporation of America a Certificate of Need 120 beds in Broward County in accordance with its original application; Granting to Health Quest Corporation a Certificate of Need for 180 beds in Broward County in accordance with its original application; and Granting to Federal Property Management a Certificate of Need for 240 beds in Broward County in accordance with its original application. DONE and RECOMMENDED this 15th day of October, 1984 in Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of October, 1984. COPIES FURNISHED: Richard G. Coker, Jr., Esquire 1107 South East Fourth Avenue Fort Lauderdale, Florida 33316 Jean Laramore, Esquire and Alfred W. Clark, Esquire 325 North Calhoun Street Tallahassee, Florida 32301 Charles M. Loeser, Esquire 315 West Jefferson Boulevard South Bend, Indiana 46601-1568 Robert D. Newell, Jr., Esquire Lewis State Bank Building, Suite 464 Tallahassee, Florida 32301 Claire D. Dryfuss, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard, Suite 406 Tallahassee, Florida 32301 David Pingree, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
