Findings Of Fact The department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order.
Recommendation It is recommended that a Final Order be entered granting Kensington Manor Inc. CON No. 6430 to construct a 120 bed nursing home and to rehabilitate the existing 147 bed nursing home to an 87 bed nursing home in Sarasota County. RECOMMENDED this 14th day of March, 1991, in Tallahassee, Florida. K. N. AYERS Hearing Officer Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of March, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-3665 Petitioner's proposed findings are accepted, except #5. Sentence stating "There are no laundry facilities in the nursing home." is rejected as inconsistent with proposed finding #7. Respondent's proposed findings are also accepted. Most of the defects in the application which Respondent finds to be not in compliance with the statutory requirements were corrected by the testimony at this hearing. COPIES FURNISHED: Alfred W. Clark, Esquire 1725 Mahan Drive Tallahassee, FL 32308 Richard Patterson, Esquire 2727 Mahan Drive Tallahassee, FL 32308 Sam Power Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Linda Harris General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 =================================================================
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following facts are found: During the night shift on March 28, 1983, respondent had only one licensed nurse on duty. Two licensed nurses were required by the petitioner's rules governing nursing home facilities. These facts were admitted by the respondent's Administrator. On or about 4:30 A.M. on April 7, 1983, a male intruder entered the respondent's facility and sexually assaulted two female residents. The respondent's facility was inspected on April 8, 1983. It was discovered that an alarm on an exit door adjacent to the rooms of the victims was not functioning properly. The alarm is designed to visually and audibly alert persons at the nursing station. On April 8th, the alarm would not sound at the nurses station. As soon as the respondent became aware of the defective alarm, it was replaced temporarily by a local alarm, and then was repaired to function as designed. A door closer on another exit door was found to be defective in that the door would not latch properly. Respondent immediately adjusted this door to work properly upon notice of the defect.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED: That respondent be found guilty of violating Rules 10D-29.108(4) and 10D- 29.122, Florida Administrative Code, and that an administrative fine in the total amount of $375.00 be imposed against the respondent. Respectfully submitted and entered this 22nd day of September, 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 22nd day of September, 1983. COPIES FURNISHED: Amelia Park District VI Legal Counsel Department of Health and Rehabilitative Services 4000 West Buffalo Avenue Tampa, Florida 33614 Mr. Albert Shepard Administrator The Ambrosia Home 1709 Taliaferro Avenue Tampa, Florida 33602 Jay Kassack, Director Department of Health and Rehabilitative Services Office of Licensure and Certification Post Office Box 210 Jacksonville, Florida 32231 David Pingree, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
The Issue The issues for determination are: (1) whether the noncompliance as alleged during the August 30, 2001, survey and identified as Tags F324 and F242, were Class II deficiencies; (2) whether the "Conditional" licensure status, effective August 30, 2001, to September 30, 2001, based upon noncompliance is appropriate; and (3) whether a fine in the amount of $5,000 is appropriate for the cited noncompliance
Findings Of Fact Charlotte is a nursing home located at 5405 Babcock Street, Northeast, Fort Myers, Florida, with 180 residents and is duly licensed under Chapter 400, Part II, Florida Statutes. AHCA is the state agency responsible for evaluating nursing homes in Florida pursuant to Section 400.23(7), Florida Statutes. As such, in the instant case it is required to evaluate nursing homes in Florida in accordance with Section 400.23(8), Florida Statutes (2000). AHCA evaluates all Florida nursing homes at least every 15 months and assigns a rating of standard or conditional to each licensee. In addition to its regulatory duties under Florida law, AHCA is the state "survey agency," which, on behalf of the federal government, monitors nursing homes that receive Medicaid or Medicare funds. On August 27 through 30, 2001, AHCA conducted an annual survey of Charlotte's facility and alleged that there were deficiencies. These deficiencies were organized and described in a survey report by "Tags," numbered Tag F242 and Tag F324. The results of the survey were noted on an AHCA form entitled "Statement of Deficiencies and Plan of Correction." The parties refer to this form as the HCFA 2567-L or the "2567." The 2567 is the document used to charge nursing homes with deficiencies that violate applicable law. The 2567 identified each alleged deficiency by reference to a Tag number. Each Tag on the 2567 includes a narrative description of the allegations against Charlotte and cites a provision of the relevant rule or rules in the Florida Administrative Code violated by the alleged deficiency. To protect the privacy of nursing home residents, the 2567 and this Recommended Order refer to each resident by a number (i.e., Resident 24) rather than by the name of the resident. AHCA must assign a class rating of I, II or III to any deficiency that it identifies during a survey. The ratings reflect the severity of the identified deficiency, with Class I being the most severe and Class III being the least severe deficiency. There are two Tags, F242 and F324 at issue in the instant case, and, as a result of the August 2001 survey, AHCA assigned each Tag a Class II deficiency rating and issued Charlotte a "Conditional" license effective August 30, 2001. Tag F242 Tag F242 generally alleged that Charlotte failed to meet certain quality of life requirements for the residents, based on record review, group interviews, and staff interviews, and that Charlotte failed to adequately ensure that the residents have a right to choose activities that allow them to interact with members of the community outside the facility. On or about August 24, 2001, AHCA's surveyors conducted group interviews. During these interviews, 10 of 16 residents in attendance disclosed that they had previously been permitted to participate in various activities and interact with members of the community outside the facility. They were permitted to go shopping at malls, go to the movies, and go to restaurants. Amtrans transportation vans were used to transport the residents to and from their destinations. The cost of transportation was paid by Charlotte. An average of 17 to 20 residents participated in those weekly trips to dine out with other community members at the Olive Garden and other restaurants. During those trips, Charlotte would send one activity staff member for every four to six residents. The record contains no evidence that staff nurses accompanied those select few residents on their weekly outings. The outings were enjoyed by those participants; however, not every resident desired or was able to participate in this particular activity. Since 1985, outside-the-facility activities had been the facility's written policy. However, in August 2000, one year prior to the survey, Matthew Logue became Administrator of the facility and directed his newly appointed Activities Director, Debbie Francis, to discontinue facility sponsored activities outside the facility and in its stead to institute alternative activities which are all on-site functions. Those residents who requested continuation of the opportunity to go shopping at the mall or dine out with members of the community were denied their request and given the option to have food from a restaurant brought to the facility and served in-house. The alternative provided by the facility to those residents desiring to "interact with members of the community outside the facility" was for each resident to contact the social worker, activity staff member, friends or family who would agree to take them off the facility's premises. Otherwise, the facility would assist each resident to contact Dial-A-Ride, a transportation service, for their transportation. The facility's alternative resulted in a discontinuation of all its involvement in "scheduling group activities" beyond facility premises and a discontinuation of any "facility staff members" accompanying residents on any outing beyond the facility's premises. As described by its Activities Director, Charlotte's current activities policy is designed to provide for residents' "interaction with the community members outside the facility," by having facility chosen and facility scheduled activities such as: Hospice, yard sales, barbershop groups for men and beautician's day for women, musical entertainment, antique car shows, and Brownie and Girl Guides visits. These, and other similar activities, are conducted by "community residents" who are brought onto the facility premises. According to the Activities Director, Charlotte's outside activities with transportation provided by Amtrans buses were discontinued in October of 2000 because "two to three residents had been hurt while on the out trip, or on out-trips."1 Mr. Logue's stated reason for discontinuing outside activities was, "I no longer wanted to take every member of the activities department and send them with the resident group on an outing, thereby leaving the facility understaffed with activities department employees." The evidence of record does not support Mr. Logue's assumption that "every member of the facility's activities department accompanied the residents on any weekly group outings," as argued by Charlotte in its Proposed Recommended Order. Charlotte's Administrator further disclosed that financial savings for the facility was among the factors he considered when he instructed discontinuation of trips outside the facility. "The facility does not sponsor field trips and use facility money to take people outside and too many staff members were required to facilitate the outings." During a group meeting conducted by the Survey team, residents voiced their feelings and opinions about Charlotte's no longer sponsoring the field trips on a regular basis in terms of: "feels like you're in jail," "you look forward to going out," and being "hemmed in." AHCA's survey team determined, based upon the harm noted in the Federal noncompliance, that the noncompliance should be a State deficiency because the collective harm compromised resident's ability to reach or maintain their highest level of psychosocial well being, i.e. how the residents feel about themselves and their social relationships with members of the community. Charlotte's change in its activities policy in October of 2000 failed to afford each resident "self- determination and participation" and does not afford the residents the "right to choose activities and schedules" nor to "interact with members of the community outside the facility." AHCA has proved the allegations contained in Tag F242, that Charlotte failed to meet certain quality of life requirements for the residents' self-determination and participation. By the testimonies of witnesses for AHCA and Charlotte and the documentary evidence admitted, AHCA has proven by clear and convincing evidence that Charlotte denied residents the right to choose activities and schedules consistent with their interests and has failed to permit residents to interact with members of the community outside the facility. Tag F324 As to the Federal compliance requirements, AHCA alleged that Charlotte was not in compliance with certain of those requirements regarding Tag F324, for failing to ensure that each resident receives adequate supervision and assistance devices to prevent accidents. As to State licensure requirements of Sections 400.23(7) and (8), Florida Statutes (2000), and by operation of Florida Administrative Code, Rule 59A-4.1288, AHCA determined that Charlotte had failed to comply with State established rules, and under the Florida classification system, classified Tag F324 noncompliance as a Class II deficiency. Based upon Charlotte's patient record reviews and staff interviews, AHCA concluded that Charlotte had failed to adequately assess, develop and implement a plan of care to prevent Resident 24 from repeated falls and injuries. Resident 24 was admitted to Charlotte on April 10, 2001, at age 93, and died August 6, 2001, before AHCA's survey. He had a history of falls while living with his son before his admission. Resident 24's initial diagnoses upon admission included, among other findings, Coronary Artery Disease and generalized weakness, senile dementia, and contusion of the right hip. On April 11, 2001, Charlotte staff had Resident 24 evaluated by its occupational therapist. The evaluation included a basic standing assessment and a lower body assessment. Resident 24, at that time, was in a wheelchair due to his pre-admission right hip contusion injury. On April 12, 2001, two days after his admission, Resident 24 was found by staff on the floor, the result of an unobserved fall, and thus, no details of the fall are available. On April 23, 2001, Resident 24 was transferred to the "secured unit" of the facility. The Survey Team's review of Resident 24's Minimum Data Set, completed April 23, 2001, revealed that Resident 24 required limited assistance to transfer and to ambulate and its review of Resident 24's Resident Assessment Protocols (RAPs), completed on April 23, 2001, revealed that Resident 24 was "triggered" for falls. Charlotte's RAP stated that his risk for falls was primarily due to: (1) a history of falls within the past 30 days prior to his admission; (2) his unsteady gait; (3) his highly impaired vision; and (4) his senile dementia. On April 26, 2001, Charlotte developed a care plan for Resident 24 with the stated goal that the "[r]esident will have no falls with significant injury thru [sic] July 25, 2001," and identified those approaches Charlotte would take to ensure that Resident 24 would not continue falling. Resident 24's care plan included: (1) place a call light within his reach; (2) do a falls risk assessment; (3) monitor for hazards such as clutter and furniture in his path; (4) use of a "Merry Walker" for independent ambulation; (5) placing personal items within easy reach; (6) assistance with all transfers; and (7) give Resident 24 short and simple instructions. Charlotte's approach to achieving its goal was to use tab monitors at all times, to monitor him for unsafe behavior, to obtain physical and occupational therapy for strengthening, and to keep his room free from clutter. All factors considered, Charlotte's care plan was reasonable and comprehensive and contained those standard fall prevention measures normally employed for residents who have a history of falling. However, Resident 24's medical history and his repeated episodes of falling imposed upon Charlotte a requirement to document his records and to offer other assistance or assistive devices in an attempt to prevent future falls by this 93-year-old, senile resident who was known to be "triggered" for falls. Charlotte's care plan for Resident 24, considering the knowledge and experience they had with Resident 24's several falling episodes, failed to meet its stated goal. Charlotte's documentation revealed that Resident 24 did not use the call light provided to him, and he frequently refused to use the "Merry Walker" in his attempts of unaided ambulation. On June 28, 2001, his physician, Dr. Janick, ordered discontinuation of the "Merry Walker" due to his refusal to use it and the cost involved. A mobility monitor was ordered by his physician to assist in monitoring his movements. Charlotte's documentation did not indicate whether the monitor was actually placed on Resident 24 at any time or whether it had been discontinued. Notwithstanding Resident 24's refusal to cooperatively participate in his care plan activities, Charlotte conducted separate fall risk assessments after each of the three falls, which occurred on April 12, May 12, and June 17, 2001. In each of the three risk assessments conducted by Charlotte, Resident 24 scored above 17, which placed him in a Level II, high risk for falls category. After AHCA's surveyors reviewed the risk assessment form instruction requiring Charlotte to "[d]etermine risk category and initiate the appropriate care plan immediately," and considered that Resident 24's clinical record contained no notations that his initial care plan of April 23, 2001, had been revised, AHCA concluded that Charlotte was deficient. On May 13, 2001, Dr. Janick visited with Resident 24 and determined that "there was no reason for staff to change their approach to the care of Resident 24." Notwithstanding the motion monitors, on June 17, 2001, Resident 24 fell while walking unaided down a corridor. A staff member observed this incident and reported that while Resident 24 was walking (unaided by staff) he simply tripped over his own feet, fell and broke his hip. Charlotte should have provided "other assistance devices," or "one-on-one supervision," or "other (nonspecific) aids to prevent further falls," for a 93-year-old resident who had a residential history of falls and suffered with senile dementia. Charlotte did not document other assistive alternatives that could have been utilized for a person in the condition of Resident 24. AHCA has carried its burden of proof by clear and convincing evidence regarding the allegations contained in Tag F324.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: The Agency enter a final order upholding the assignment of the Conditional licensure status for the period of August 30, 2001 through September 30, 2001, and impose an administrative fine in the amount of $2,500 for each of the two Class II deficiencies for a total administrative fine in the amount of $5,000. DONE AND ENTERED this 13th day of February, 2003, in Tallahassee, Leon County, Florida. FRED L. BUCKINE 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 13th day of February, 2003.
Findings Of Fact Petitioner is the licensee for Palm Beach Regional Hospital. Respondent is the state agency charged with responsibility for issuing certificates of need ("CONs") for both hospital and nursing home beds pursuant to Chapter 381, Florida Statutes. A letter of intent is a statutory prerequisite for filing CON applications under Chapter 381. Petitioner filed a letter of intent dated February 21, 1991, with Respondent. The letter of intent notified Respondent of Petitioner's intent to file an application for a certificate of need ("CON") to convert 12 acute care beds in Palm Beach Regional Hospital to skilled nursing beds. Petitioner requested that its application for CON be reviewed in the first 1991 batching cycle for hospital projects. Respondent rejected Petitioner's letter of intent by letter dated March 7, 1991. Petitioner's letter of intent was rejected for the reason that it was ". . . for a project which is reviewable in the nursing home cycle, rather than the hospital review cycle." Petitioner timely filed a petition for formal hearing to contest Respondent's proposed agency action. Respondent has a long standing policy of requiring applications for hospital-based skilled nursing units ("SNU") to be filed in the nursing home batching cycle, on nursing home application forms, and in competition with applications by other nursing homes. Respondent reviews such applications to determine need under the nursing home bed methodology. Respondent unsuccessfully attempted to promulgate its policy of requiring SNUs to be considered in nursing home batching cycles through formal rulemaking procedures in Proposed Rules 10-5.002(13) 7/ and 10-5.008(2)(d). 8/ Both proposed rules were determined in Venice Hospital, Inc. v. Department of Health and Rehabilitative Services, 12 F.A.L.R. 3320 (HRS 1990) to be invalid exercises of delegated legislative authority. Hearing Officer Diane K. Kiesling found that the proposed rules were not reasonable or rational and would lead to an illogical result. The policy Respondent attempted to codify in Proposed Rules 10- 5.002(13) and 10-5.008(2)(d) is no less unreasonable and irrational when applied on a case-by-case basis in this proceeding. 9/ Hospital-based skilled nursing units and free-standing community based nursing home beds are not comparable. Comparing the two types of beds in the same batching cycle creates an unfair comparison and fails to address an existing and expanding gap in the need for medical care needs for health planning purposes. Changes in health care reimbursement since 1985 and 1986 have created a gap in the need for medical care provided by acute care hospitals and that provided by most nursing homes. The level of medical care in the gap is referred to as subacute care. Patients who no longer need the acute care provided by hospitals but who need a higher level of medical services than that available in most nursing homes can be properly treated in a distinct part of a hospital known as a hospital-based skilled nursing unit or SNU. 10/ Hospital-based skilled nursing units provide a higher level of service than that provided by free-standing community nursing homes. An SNU provides 24-hour nursing by an RN nurse, skilled nursing multi-disciplinary treatments, and therapy services and equipment. Patients who do not meet acute care standards but who have more complex diagnoses or who require specialized equipment are difficult to place in free standing community nursing homes due to the level of services and types of equipment required for proper treatment. Some free-standing community nursing homes do provide some of the services available in a hospital-based SNU. However, the complex medical services required for subacute care is not available in most nursing homes. It is therefore difficult to place patients with subacute medical care needs in nursing homes. Petitioner, for example, has been unable to place patients in free standing community based nursing homes if a patient requires: therapy three or four times a day; ventilator assistance; dressings three or four times a day for decubitus ulcers; heart monitors; or respirators. The unavailability of staff, high cost of care, and lower Medicare rates paid to nursing homes 11/ preclude most free-standing community nursing homes from delivering the level of services required for subacute care in hospital-based skilled nursing units. The types of patients served by a hospital-based skilled nursing unit are different from those served by a free- standing community nursing home. The average length of stay in a hospital-based skilled nursing unit is approximately 15 to 20 days. While the average length of stay in a free-standing community nursing home is less than 90 days, many patients in such facilities have lengths of stay in excess of one year. 12/ Hospital-based skilled nursing units are predominantly Medicare patients whereas patients in free-standing community nursing homes are predominantly Medicaid patients. Medicaid does not reimburse for subacute care provided in hospital-based skilled nursing units. Finally, patients in hospital-based skilled nursing units have more complex and difficult diagnoses and require more specialized equipment. Hospital-based skilled nursing units cannot compete equally with free- standing community nursing homes. The cost of subacute care provided by SNUs is two or three times more than the cost of medical care provided by free-standing community nursing homes. The higher cost for SNUs is a result of the higher level of medical services provided in SNUs. Federally funded Medicare reimbursement is a principal payor source for both hospital-based skilled nursing units and free-standing community nursing homes. 13/ The conditions of participation in Medicare are the same for both types of facilities, but a higher rate of Medicare reimbursement is allowed for hospital-based skilled nursing units. Hospital-based skilled nursing units are certified under federal guidelines to care for patients who no longer meet "acute" care criteria. Acute care is determined under federal guidelines on the basis of standards that include "intensity of service" and "severity of illness." Hospitals and physicians may face sanctions under federal guidelines if patients who do not meet the acute care criteria are kept in acute care beds. Hospitals are the primary source of patients admitted to nursing homes. Petitioner is put in a difficult position when it cannot place subacute patients in community nursing homes, due to the level of medical care required for such patients, but cannot keep such patients in acute care beds in the hospital without facing sanctions under federal guidelines. Respondent's policy of requiring SNUs to be reviewed in the nursing home batching cycle is based in part upon Respondent's concern over the potential for increased costs in the delivery of medical care. Although hospital-based skilled nursing units are reimbursed by Medicare at a higher rate than that received by nursing homes, SNUs are not prohibited under federal guidelines from treating patients who require medical care that is below the standards for either acute care or subacute care. There are no restrictions under federal guidelines on the patients each type of facility can admit. Patients in both types of facilities must meet the same admission standards for treatment, and both types of facilities can treat patients who are neither acute care patients nor subacute care patients. 14/ As a practical matter, however, the unavailability of staff, high cost of care, and low Medicare reimbursement rates preclude most free-standing community nursing homes from delivering the level of services required for subacute care in hospital-based skilled nursing units. Respondent has the ability to place conditions on certificates of need and regularly does so. If Respondent imposes conditions of certification that preclude a provider from treating patients who meet Medicare guidelines, however, the state may be decertified for federal Medicare funds. Similarly, if a provider voluntarily refuses to treat such patients, the provider may be decertified for Medicare reimbursement. It is uncontroverted that it would be inappropriate for a hospital- based skilled nursing unit to treat patients who require levels of medical care that are available in a free- standing community nursing home and receive a higher rate of reimbursement from Medicare. Such treatment would be inappropriate for purposes of both health care planning and the cost effective delivery of medical services. The potential for inappropriate treatment does not establish that Petitioner does or would provide such treatment if its application for CON is reviewed in the hospital batching cycle. The evidence failed to establish that reviewing Petitioner's application in the hospital batching cycle would preclude Respondent from adequately addressing Respondent's concerns, including the actual need for hospital-based subacute care. CON applications for hospital-based skilled nursing units must be reviewed in either the nursing home batching cycle or the hospital batching cycle. There is no specialty bed need methodology for reviewing CON applications for SNUs. Hospital beds and nursing home beds are licensed respectively under Chapters 395 and 400, Florida Statutes. Beds in hospital-based skilled nursing units are in fact "hospital" beds under Chapter 395 and not nursing home beds under Chapter 400. SNUs are licensed by Respondent as general hospital beds pursuant to Chapter 395. 15/ The two types of beds are in different planning cycles, and the application form used for nursing home beds is not suitable for SNUs. Respondent's policy, however, requires SNU beds to be carried as part of the inventory of nursing home beds for purposes of projecting need under pool projections utilized by Respondent for the purpose of evaluating the need for new beds. The standards for licensing nursing home beds under Chapter 400 are different from the standards applied to hospital beds in Chapter 395. It is difficult to prove need for an SNU under the standards applied for purposes of licensing nursing home beds. As Hearing Officer Kiesling found in Venice Hospital: A hospital desiring to establish . . . [an SNU] . . . will likely find itself having either to challenge the fixed need pool for nursing home beds or litigate the almost inevitable denial of its application for lack of need. Either course of action would in- volve time and expense over and above those usually encountered in the CON process, par- ticularly because such an application would likely draw the opposition of existing nursing homes, even though their services are not really comparable. . . . The proposed rule amendments do not comport with the basic health planning policy of reducing over-bedding by encouraging conver- sion to other services. It is unlikely a hospital could get a skilled nursing unit by showing a numeric need under the nursing home need methodology, and any attempt to show excep- tional circumstances would be hampered by the lack of utilization data. Such beneficial conversions will probably also be chilled by the difficulty in converting a skilled nursing unit back to general acute care use, should it not be successful. Given the extreme acute care over-bedding which exists throughout the state, it is not anticipated that there will be any need for additional acute care beds for the foreseeable future. Since a skilled nursing unit would not be counted in the acute care bed inventory, the reconversion to acute care use would have to undergo CON review and would almost certainly be denied.
Recommendation Based upon the foregoing Findings of Facts and Conclusions of Law, it is recommended that Respondent should enter a final order accepting Petitioner's letter of intent to file a CON application for a hospital-based skilled nursing unit to be reviewed in the appropriate hospital batching cycle. RECOMMENDED this 21st day of November, 1991, in Tallahassee, Leon County, Florida. DANIEL MANRY 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 21st day of November, 1991.
The Issue Whether petitioner has two years' practical experience in nursing home administration within the meaning of Section 468.1695(2)(c)3., Florida Statutes (1987) and Rule 21Z-11.008, Florida Administrative Code?
Findings Of Fact Westminster Oaks, a "retirement village" or "continuing care facility" in Tallahassee, has a clinic, a 60-bed nursing home, an adult congregate living facility and 150 "independent living" units for older people, who are guaranteed nursing home beds, if needed, as their independence ebbs. Before Donald Long began as Westminster Oaks' administrator on December 1, 1986, the position had gone unfilled for two years. By the time he arrived, petitioner Sandra Kelly, formerly director of nursing at Westminster Oaks, had become director of health care services, for the express purpose of gaining the experience necessary to sit for the nursing home administrator licensure examination. She was following in the footsteps of Sue Reeder and five other trainees, of whom three -- all who have finished the program -- have been permitted to sit for the exam from which respondent proposes to bar her. On August 1, 1986, Ms. Kelly assumed supervisory responsibility for the Health Center, which included the nursing home. As director of health care services, she was responsible not only for the nursing home, but also for the clinic and the adult congregate living facility with its 34 places. (All but six were filled at the time of hearing.) The clinic at Westminster Oaks monitors independent residents' blood pressures, and administers B-12 injections, but does not provide home health services. After Sue Reeder left in January of 1988, she was also called upon as needed to manage the resident services department, along with operations of the business office, and the dietary and housekeeping department that related to residents of the independent living units. Even her work in marketing related to the nursing home. Even when called upon to help in other areas, she was not relieved of responsibility for the nursing home, which she had effective charge of at least 95 percent and perhaps 100 per cent of the time. (Testimony of Long) Besides having overall charge, she rotated through each department in the nursing home, managing it; or, as in the case of the housekeeping department which served not only the nursing home but also other facilities in the complex, managing operations as they related to the nursing home. In addition to her nursing home duties, she spent 15 to 20 minutes a day at the adult congregate living facility, more on days when new residents were admitted. She made rounds at the adult congregate living facility quarterly, and accompanied inspectors from the Department of Health and Rehabilitative Services when they inspected. She also met with the clinic nurse three times weekly for fifteen minutes a visit. As director of health care services, she has devoted the overwhelming majority of her time to the nursing home. She has had complete and uninterrupted charge of the nursing home's social services and activities departments, and personally hired the activities director. She also hired a medical records consultant, and oversaw putting the medical records in order for inspection by the Department of Health and Rehabilitative Services. Although she did not hire or fire otherwise, leaving that to department heads, she had the right to do so. At the time of the hearing, she had spent more than 27 months as director of health care services. Although she also devoted some of her time to the adult congregate living facility, and to the clinic, she spent more than two "working years" on nursing home administration, aside from time devoted to the adult congregate living facility and the clinic. As de facto administrator of Westminster Oaks' nursing home, under Mr. Long's supervision, she planned for and helped organize, direct and control all nursing home departments, including social services, and, insofar as they pertained to the nursing home, the nursing, dietary, housekeeping, administration and maintenance departments.
Findings Of Fact The Agency For Health Care Administration ("AHCA") is the state agency responsible for the administration of certificate of need ("CON") laws. In this case, AHCA projected a need for an additional 295 community nursing home beds in District 3 for the July 1996 planning horizon, and reviewed the applications submitted in response to the published need. A numeric need for 186 beds remains. CON applications are evaluated according to applicable statutory and rule criteria and, as required by Section 408.035(1)(a), Florida Statutes, the preferences and factors in the state and local health plans. The applicable state plan is Toward A Healthier Future - The 1993 State Health Plan. The applicable local health plan is the District Three Health Plan for 1992, with 1993 Allocation Factors, prepared by the North Central Florida Health Planning Council in Gainesville. AHCA has not promulgated a rule subdividing District 3. However, the local planning council has divided the sixteen counties into nursing home planning areas, as follows: Columbia, Hamilton, Suwannee, Bradford, Union and Lafayette Counties; Alachua, Dixie, Gilchrist, and Levy Counties; Putnam County; Marion County; Citrus County; Hernando County; Lake and Sumter Counties. In this case, one applicant, Dixie Health Care Center, L.P., ("Dixie") proposes to locate in Dixie County in planning area 2 or (b). Hilliard HealthCare, Inc., ("Hilliard"), Unicare Health Facilities, Inc., ("Unicare"), Life Care Centers of America, Inc., ("Life Care") and Beverly Enterprises- Florida, Inc., ("Beverly") propose to construct nursing homes in planning area 7 or (g). Within planning area 7, Hilliard would build a nursing home in Sumter County, while Unicare, Life Care, and Beverly would build in Lake County. The total population in planning area 2 is approximately 230,000, and in planning area 7, approximately 180,000. More relevant to a determination of need for a nursing home, the population age 65 and over in planning area 2 is approximately 25,000, as compared to 49,000 in planning area 7. Within planning area 2, the projected Dixie County population over 65 in the year 2000 is 2,211, while the Sumter County projection is 9,824 residents. The actual 1994 population age 75 and over was 644 in Dixie, and 3,296 in Sumter County, and over 20,000 in Lake County. Currently, there are 1,238 licensed and approved beds in planning area 2, and 1,391 in planning area 7. For planning area 2, which includes Dixie County, there are 22 people age 65 and over for each nursing home bed. In planning area 7, the ratio is 41.1 to one. If 120 beds are added in Lake County, the comparable county ratio will decrease from 41.4 to 37.6 persons 65 and over to a bed. The addition of 60 beds in Sumter County will result in a decline in the county from 39.5 to ratio of 30.7 to 1. The district-wide ratio for District 3 is 34.5 persons 65 and over for every nursing home bed. The local planning council has compared the relative need for nursing home beds by planning area, according to a Planning Area Nursing Home Bed Allocation Matrix ("PANHAM"). Using a comparison of the percent of population age 75 and over to the percent of district beds in each planning area, the local health council describes planning area 7 as high need/moderate occupancy. It is ranked the planning area of greatest need for this CON application cycle. Planning area 2 is described as an area of low need/high occupancy. It also ranked as an area of priority in this cycle, although lower than planning area 7. The local health council has adopted three factors for use in making more specific determinations of locations which will best meet unmet needs within a planning area. Ranked in order of priority, the factors are: the absence of nursing homes in the same county, a location more than 20 miles or 25 minutes drive from any other nursing home, and an area in which nursing homes within a 20 mile radius exceeded 90 percent occupancy for the most recent twelve months or 95 percent for the most recent six months. There is no evidence that construction of new nursing home beds is not needed or that the need is based on any inefficiency or quality of care problems in existing nursing homes. Consideration of the availability, utilization, and adequacy of other nursing homes and alternative health care providers in the district is also mandated by statute. See, e.g. Subsections 408.035(1)(b), (1)(d), (2)(a), (2)(b), (2)(c), and (2)(d), Florida Statutes. In this group of applicants, only Dixie is favored by the first local health council factor for proposing to locate in a county in which there are no existing or approved nursing homes. Dixie does not meet the preference for a location more than 20 miles or a 25 minute drive from the closest nursing home. Dixie's expert witness who believed the drive took more than 25 minutes lacked direct knowledge of the road conditions. By contrast, the deposition testimony of the administrator of Tri-County Nursing Home established that the drive from Tri-County to Cross City takes about 15 minutes, most of it on a four lane highway, U.S. 27. Tri-County in Wilcox near Fanning Springs, and Medic-Ayers in Trenton are both within 20 miles or 25 minutes drive of the proposed Dixie site. Their occupancy rates for the first six months of 1993 were 94.41 percent and 95.85 percent, respectively, or an average of 95.13 percent. Therefore, Dixie is extremely close to meeting the local allocation factor related to existing nursing home occupancies in excess of 95 percent for the January-June 1993. By contrast, there are 12 existing and approved nursing homes in Lake County, and one in Sumter County. Occupancy rates in Lake County averaged 91.7 percent, but the facility in Sumter County reported 99.13 percent occupancy in the 1992-1993 reporting period. Applicants in Lake and Sumter Counties are not favored for proposing locations in counties without nursing homes, or for locations more than 20 miles or 25 minutes drive from existing nursing homes. Lake County applicants also do not meet the preference for an area defined by a 20-mile radius in which average occupancy rates exceeded 95 percent for the most recent six months or 90 percent for the most recent 12 months. The Sumter County applicant, Hilliard, does meet the occupancy requirement for a location in which nursing homes within a 20 mile radius exceeded 90 percent occupancy for the most recent twelve months. Because the state rule methodology results in a positive need calculation, the local health council factor related to special circumstances in the absence of numeric need is inapplicable to this case. Dixie Health Care Center, L.P., Cross City, Dixie County Dixie is seeking AHCA's issuance of CON 7492 to construct a 60-bed nursing home in Cross City, Dixie County, which is in planning area 2. If issued a CON, Dixie offers to be bound by the following conditions: to construct the nursing home on a specific site in Cross City; to provide 80 percent of its total resident days to Medicaid-reimbursed residents by the second year, with all beds certified for Medicaid and 9 beds certified for Medicare reimbursement; to provide rehabilitative, respite, and adult day care, with transportation for some day care participants; and not to deny HIV+ admissions. At the time that Dixie filed the letter of intent for the 60-bed project in Dixie County, it also submitted three others for contiguous areas of District 3. Thus, four legal notices, for projects in Alachua, Gilchrist, Levy and Dixie Counties were submitted by fax and then by mail to the Gainesville Sun newspaper for publication. All four legal notices, when published, referred to Levy County, as the proposed location of the nursing home. The proof of publication sent by the newspaper to the applicant and included in the CON application states that the notice published was for Dixie County, although the notice itself states that the project will be in Levy County. Dixie's health care planning expert requested the publication of a corrected notice, but there is no evidence that one ever appeared in the newspaper. AHCA accepts CON applications, despite publication errors, if the error is made by a newspaper, not by the applicant. Dixie is a partnership formed to file the application for CON 7492. The project will be funded by Smith/Packett Med-Com, Inc. Smith/Packett is owned by James R. Smith, who with Herbert H. Frazier, is a general partner in Dixie Health Care Center, Limited Partnership. Herbert Frazier is an employee of a Florida licensed general contractor, MB Conn Construction, and president of its Frazier Division which oversees the construction of nursing homes. Separately, the two general partners in Dixie own over 20 nursing homes, and jointly own one in Virginia and one in North Carolina. The partners owned, but, in February 1994, sold a Lake City nursing home. The estimated total project cost is approximately $3,000,000, of which the general partners will provide $250,000 in cash for project development costs and initial cash flow requirements, as noted in the application in the schedule 3 assumptions. Dixie included in its application a letter of interest in financing the project from Colonial Bank, Alabama. Dixie has a contract to purchase a two acre site for the project for $33,000. As previously noted, Dixie meets the highest priority local allocation factor for proposing to locate in a county which has no nursing homes, and is close to the factor for over 95 percent average occupancy rates in the nearest nursing homes. Dixie is also favored by the local plan for proposing to construct at least 60 beds, for improving access within the planning area, and for proposing respite care, adult day care, and rehabilitative therapies. Dixie meets state health plan preferences for proposing the following: to locate in a subdistrict with over 90 percent occupancy (93.42 percent for plan- ning area 2); to serve 80 percent Medicaid, which is in excess of the subdistrict average of 79.37 percent in the first six months of 1993, for specialized services to AIDS, Alzheimers' and mentally ill patients, to provide a continuum of services including long term, respite, and adult day care; to construct a well-designed facility to maximize resident comfort and quality or care, which is a reasonable size and meets all licensure requirements; to provide rehabilitative and restorative therapies, to establish a Medicaid reimbursement rate of $91.75 in year one and $94.65 in year two, as compared to the projected subdistrict high of $92.83 in 1995 and $96.54 in 1996 (using an annual 4 percent inflation rate from the January 1994 rate); * * * to offer multi-disciplinary services to residents, with the various therapist, social workers, and counselors; to document protection for residents rights and privacy, and to establish resident's councils, quality assurance and discharge planning programs, as SunQuest and all other nursing homes operating in Florida must do by state laws; to operate with lower administrative costs and higher patient care costs than the average in the district ($21.61 and $51.33 respectively in year two (1996), in contrast to $22.02 and $41.62 in 1992 for the respective average district per diem costs); Questions were raised about Dixie's compliance with state factors (8) for providing superior resident care in existing facilities, and (9) for staffing ratios which exceed minimum state requirements and are appropriate for proposed special services. The proposal is substantially based on the assumption that the applicant will contract with SunQuest for management services. Although the application refers to a management contract with SunQuest, no contract has been executed, which is not unusual prior to the issuance of a CON. At the final hearing, however, Dixie contended that SunQuest is only one of the candidates for a management contract, while conceding that the management policies and procedures in its application are those of SunQuest. In fact, the Dixie application states in response to state allocation factor (9) that SunQuest will be the management company. SunQuest manages 10 and leases an additional 10 long term care facilities in the United States, two in Florida. One of the Florida nursing homes, Bayshore Convalescent Center in North Miami Beach, has a superior license. SunQuest also manages the Lake City Extended Care Center, which was built by the company which employs Mr. Frazier, began accepting residents in December 1993, and was sold by the Dixie general partners in approximately February 1994. The original holder of the Lake City CON became unable to develop the proposal and contacted Mr. Smith and Mr. Frazier just prior to the expiration of the CON. They acquired the CON, financed, designed, and constructed the nursing home. Lake City currently operates with a conditional license, as a result of medical record-keeping deficiencies. The testimony, by Dixie's corporate representative, that SunQuest is merely one management company candidate along with Senior Care Properties, is inconsistent with the totality of the proposal, which renders significantly less reliable the program descriptions in the original application. Dixie's intent to provide van transportation for adult day care participants was also questioned, due to the absence of any provision for the service in the financial schedules to the application. The financial feasibility of Dixie's proposal is also a matter at issue. Although Dixie has a contract to purchase a two acre site, the architect who designed the facility testified he had constructed a 120-bed two-story nursing home on less than two acres, but that two and a half to three acres are generally needed to construct a 60-bed facility. Dixie projected a net loss of $201,813 in the first year of operation and a net profit of $55,123 by the end of the second year. The general partners have committed to provide $250,000 to cover the first year negative cash flow. However, the average annual salaries projected when multiplied by number of full time equivalent ("F.T.E.") positions listed on schedule 6 of its application exceeds salaries listed in the projected income and expenses on schedule 11 by approximately $219,866 in year one and $51,694 in year two. Including the underestimate of related benefits, the loss expected in the second year is $8,759. Dixie maintains that the staffing on schedule 6 cannot be compared to the pro forma, because the staffing and related expenses in the pro forma will increase over the first year as the census increases, while the staffing schedule is a snapshot at the end of the first year. The same is not true for the second year, since the facility is projected to be full after 8 months. Dixie's expert on finance described the second year discrepancy between a $50,000 profit and an $8,700 loss as insignificant in determining the financial viability of a $2 million project which, taking into consideration depreciation, amortization, and noncash related items, still results in a positive cash flow. Dixie's financial feasibility also depends on its reaching 96 percent occupancy by the fourth quarter of the first year. One witness for Dixie has achieved 93 percent occupancy in similar facilities in a county he deemed comparable, but has operated his facilities since 1989. Dixie also has to contend with competition for residents and staff from a relatively new facility within 20 miles and a 25 minute drive, Tri-County Nursing Home. Tri-County Nursing Home in Gilchrist County opened in May 1992, close to the Gilchrist- Dixie line, serving residents of Levy, Gilchrist and Dixie Counties. Approximately 30 of its 60 beds are occupied by Dixie County residents, all of whom rely on Medicaid reimbursement. Tri-County is also establishing a 25 person adult day care, having completed the required state inspection and awaiting the issuance of its license. After 8 months of operation, 51 of the 60 beds were filled. In June of 1993, Tri-County was full, with 98 percent occupancy. Approximately 40 percent of Tri-County's staff resides in Dixie County. There was testimony that 41 registered nurses reside in Dixie County, but with no information concerning their distribution within the county, current employment, or ages, their availability to work at a new nursing home could not be evaluated. In Gilchrist County, the ratio of persons 65 and over to nursing home beds is 8.7 to 1, in contrast to 31.46 for Levy County, and 34.5 for the district. The data supports the conclusion that Tri-County relies on service to Dixie County residents, clearly has an insufficient population base within Gilchrist County to fill its beds, and even when combined with Levy County is below the district ratio of 34.5 persons over 65 per nursing home bed. AHCA's expert in health planning and nursing home financial feasibility testified that Tri-County has had financial difficulties. On balance, Dixie has failed to demonstrate that it has estimated reasonable land requirements and costs, and that it can meet the required occupancy and staffing levels to survive financially, without adversely affecting Tri-County. Hilliard Healthcare, Inc., Bushnell, Sumter County Hilliard is the applicant for CON 7485 to construct a 60-bed nursing home in Bushnell, Sumter County, which is in planning area 7. Hilliard's CON, if issued, will commit to construction of Osprey Point Nursing Center on a specific five acre site on State Road 475, and to the establishment of a 10-bed Medicare unit, and a 20-bed secure Alzheimers' unit, with all beds Medicare and Medicaid certified. Hilliard commits to providing 64 percent of total resident days for Medicaid. The total estimated project cost is $2,650,000, funded by $650,000 cash from stockholders and $2,000,000 in loans from Bankers First. Hilliard, formed in 1987, currently owns a superior licensed 120-bed facility in Nassau County, having completed a 60-bed expansion in September 1994. The Nassau County nursing home is managed by Health Care Managers ("HCM"), which is owned by Steven Sell, Hilliard's president and founder. Mr. Sell, in partnership with three others, first acquired a 55-bed facility in Jacksonville in 1984, expanded it to 120 beds in 1988, and sold it in 1994 for a profit of approximately $2.5 million. In 1991, Hilliard's president also received a CON to construct a 60-bed nursing home in Clay County, which was sold without a profit, but at a break-even point, while it was under construction. HCM is the intended manager of the Bushnell facility, if the CON is approved. Hilliard submitted a notice of its intent to file a CON application to the Sumter County Times newspaper for publication. The notice, published in November of 1993, stated erroneously that the application would be filed on December 1, 1992, rather than December 1, 1993. Hilliard's president testified that he knows for a fact that he submitted the notice with the correct date, but no document in evidence establishes what Hilliard submitted to the Sumter County Times. Hilliard's proposal does not meet the local health council factors for a location in a county without nursing homes, nor is Bushnell more than a 20 mile radius or 25 minute drive from existing nursing homes. It does merit consideration under the factor which relates to the occupancy of nursing homes within a 20 mile radius, all of which exceeded 90 percent from July 1992 - June 1993, ranging from 90.89 to 99.13 percent. The highest rate was at WeCare, the only other nursing home in Sumter County, which is located in Wildwood, in the northern area of Sumter County. WeCare has two fifteen-bed Alzheimers' units, and unchallenged CON approval to add 30 beds. The approval of the 30 additional beds at WeCare raises the bed to population ratio of Sumter County from 20.2 to 23.5 per 1000, in contrast to the current Lake County ratios of 22.4. With the approval of 60 beds at Hilliard and another 120 beds in Lake County, the ratios are increased to 30.2 in Sumter and 24.7 in Lake County. After approval of WeCare's addition, the need in Sumter County has been decreased. Hilliard, by its proposal to serve central and southern sections of Sumter County, would improve access within the planning area. The occupancy rate for Medicare patients at WeCare was 1.1 percent. Hilliard contends that the relatively low percentage of Medicare services indicates a need for short-term, post-hospitalization rehabilitation services, as proposed in its 10-bed Medicare unit. Hilliard demonstrated that average lengths of hospital stays for Sumter County residents for certain procedures exceed national Medicare reimbursement averages, but there was no comparison to average lengths of stay within the district or the state. Other local health council allocation factors which apply to and favor Hilliard's proposal are those for: establishing a facility of at least 60 beds, improving access within a planning area with over 80 percent occupancy, and serving Alzheimers' and dementia patients. Hilliard's proposal meets state preferences for: locating in a subdistrict exceeding 90 percent occupancy (95.42 percent for planning area 7); * * * providing specialized services to Alzheimers' residents; offering respite care (although limited to hospice services); designing a comfortable facility, with short corridor segments, relatively large therapy areas, and a separate enclosed courtyard for the Alzheimers' unit; proposing occupational, speech and physical therapies, particularly to enhance the functioning of Alzheimers' residents; setting Medicaid rates of $101.90 for 1996 and $104.13 for 1998, in contrast to the highest rates projected for the same time, $107.89 and $113.28, respectively (using 5 percent inflation); providing superior resident care at its existing Nassau County Nursing home; proposing staffing ratios in excess of minimum state requirements, with reasonable salaries; including multi-disciplinary staff, including occupational, speech, and physical therapists, as well as nurses and an activities director; protecting residents' rights and privacy, and developing quality assurance and discharge planning programs; and proposing lower administrative costs ($26.35) with higher patient care costs ($64.30) than the district average of $26.63 and $54.67, respectively (1977 projection with 5 percent inflation). Hilliard does not meet state preference 2 for service to Medicaid proportionate to the subdistrict average, which is 69.95 percent, in contrast to Hilliard's proposed commitment of 64 percent. Under the preference, Hilliard's proposal to emphasize Medicare reimbursed therapies does not relieve it of the obligation to serve a proportionate share of Medicaid. Hilliard's proposal does not meet the specific exceptions allowed in preference 2 for applicants proposing to serve particular ethnic or cultural groups, and those developing multi-level care systems. Hilliard has a commitment letter from Banker's First to provide a $2 million loan for a fee of 1 1/2 to 2 percent of the principal loan amount, or $30,000 to $40,000. In schedule 1 of the application Hilliard's estimate of closing costs in $10,000, with $4,120 in legal fees. Dixie's expert claimed that the closing cost was inconsistent with the Banker's First letter and unreasonably low. By contrast for a $3 million loan, Dixie estimated $10,000 for loan closing costs, $30,000 for legal fees, $10,000 for recording fees and taxes, and $60,000 in loan origination fees. Dixie's expert apparently overlooked an additional $20,000 in origination fees, which was included on Hilliard's schedule 1. Hilliard projects a loss of $177,000 in year one, and income from nursing home operations of $114,690 in year two. In the first year, a loan of $271,660 is expected to cover the losses in year one. In the second year, a pay off of $154,940 on the loan is expected. The financial ability of Hilliard's shareholders to provide the initial $650,000 equity contribution and $271,660 to cover first year losses was questioned. Hilliard's president noted that the shareholders previously raised in excess of $600,000 to develop the Nassau County facility and have received $2.5 million in profits from the sale of the Jacksonville nursing home. Personal financial statements of three of the six stockholders were included in Hilliard's application. The personal financial statements were incomplete, omitting referenced attachments. The statements were also inaccurate or inconsistent, with missing liabilities, discrepancies regarding property values, and including the total value of some property which was not owned by the shareholders individually. Nevertheless, the statements do, according to Dixie's expert, show that the shareholders could provide over $900,000 in capital needed for Hilliard to be financially feasible, although that would take virtually all of the liquid assets, unless they assumed some additional individual debts. On balance, Hilliard has shown that Sumter County is more likely than not in need of additional Medicare-reimbursed subacute services, and that its proposal is financially feasible based on the shareholders' history of being able to raise capital for similar development projects. Lake County Applicants Three applicants in this batch seek to construct new 115 or 120-bed nursing homes in Lake County. Given the remaining numeric need for 186 beds, only one of the applicants can be approved. See, Beverly Enterprises-Florida, Inc., et al. v. AHCA, et al., DOAH Case No. 92-6656 (F.O. 10/17/94). In addition, the District 3 Allocation Factors Report Preferences includes the following guideline: To the extent possible, all planning areas ranked in one of the four categories of priority established in subparagraph d above should be approved to add some new beds. Unicare Health Facilities, Inc., Lady Lake, Lake County Unicare Health Facilities, Inc. ("Unicare") is an applicant for a CON to construct a 120-bed nursing home or to receive a partial award to construct a 115-bed community nursing home in the town of Lady Lake, in northwest Lake County. Unicare proposes to have its CON conditioned on the establishment of a 20-bed Alzheimers' and related dementia unit, an adult day care to accommodate an additional 20 Alzheimers' sufferers for half day care, and on providing 73 percent of total resident days to Medicaid residents. Unicare also plans to include a 10-bed subacute unit, and to offer rehabilitative therapies, respite and hospice care. The total size of the building is 58,700 square feet. Unicare is a subsidiary of United Health, Inc., which is committed to finance the project by providing an equity contribution of 60 percent and drawing on its available line of credit for the remaining 40 percent of the total projected cost of $5,754,983. Unicare owns and operates 45 nursing homes in 7 states, has been in business for 28 years and in Florida since 1982, and currently owns and operates 13 Florida nursing homes. Life Care Centers of America Life Care Centers of America, Inc. ("Life Care") proposes to establish a 120-bed community nursing home of 53,175 square feet, in west central Lake County, in the areas of Lady Lake, Tavares, or Leesburg, for a total project cost of $5,906,000. Life Care's CON, if issued, will include its commitment to provide 73 percent of total resident days to Medicaid residents, to establish a 20-bed Alzheimers/dementia unit, to offer adult day care services, and to include a 20-bed sub-acute unit. Life Care is a privately held company operating 150 nursing homes in 27 states. Life Care owns two and operates three other nursing homes in Florida. Life Care proposes to fund the Lake County nursing home from $206,000 cash-on-hand and $5,700,000 in financing from a non-related company. With its application, Life Care submitted letters of interest from potential lenders with interest rates ranging from 9 to 12 percent, and a 25 year amortization schedule. In reviewing other Life Care applications, AHCA has considered and rejected as incomplete a list of capital projects identical to that included in this Lake County application. Specifically, Life Care listed projects by county name, although the total amount of capital obligations, according to AHCA, was significantly underestimated. Life Care submitted, at hearing, its exhibit 6, a stipulation to certain facts and, through the testimony of its Vice President for Development, established that the facts related to the schedule 2 issues in this case are identical to those considered in Life Care Centers of America, Inc. v. Agency For Health Care Administration, DOAH Case No. 94-2409 (F.O. 10/24/94), which is pending on appeal in the district court. Beverly Enterprises Beverly Enterprises-Florida, Inc. ("Beverly") is a wholly owned subsidiary of Beverly Corporation-California, a subsidiary of Beverly Enterprises, Inc. Beverly proposes to construct a 120-bed community nursing home in Lady Lake or Leesburg, in Lake County, with a commitment to provide 73 percent of total annual resident days for Medicaid, to establish a 20-bed Medicare-certified subacute unit with 4 beds for ventilator-dependent patients, an 18-bed Alzheimers' wing, an adult day care for 8 clients, respite care, and to accept and care for residents who are HIV positive, or have mental health disorders. Beverly also will commit to donate $10,000 for gerontological research. Beverly Enterprises companies operate 720 nursing homes, 70 in Florida. Of the 70, 41 are operated by the applicant. Beverly's proposal to establish Lake Beverly Terrace has a total project cost of $5,421,372, for 48,969 square feet. Existing Nursing Home and Alternatives - Sections 408.035(1)(b), and (2), Florida Statutes. As of January 1994, there were 460 nursing home beds in Leesburg, 142 in Clermont, 236 in Mount Dora and 377 in Eustis. All of the facilities, exceeded the average Lake County occupancy of approximately 92 percent in 1992- 1993, except two, Waterman Hospital Extended Care Center in Eustis and Edgewater in Mount Dora. All of the parties agreed that additional subacute and Alzheimers' beds, and adult day care spaces are needed in Lake County. Local and State Health Plans - Sections 408.035(1)(a), Florida Statutes. Unicare, Life Care, and Beverly propose to locate in Lake County, within planning area 7 for Lake/Sumter Counties. The planning area has a higher priority need ranking than planning area 2, as determined by the local health plan council. Local allocation factors 1 - 5 apply equally, or are inapplicable to the three proposals. There are existing nursing homes in the county, which are within 20 miles or 25 minutes all of the proposed locations, and which exceeded 90 percent occupancy. Unicare distinguishes its proposal based on its intention to locate in the town of Lady Lake, rather than further contributing to the concentration of nursing homes in Leesburg. Lady Lake was, in 1990, the third largest municipality in Lake County, and projected to be the largest in 2000. The 1990- 2000 projected growth rate is over 100 percent, in contrast to 13 percent for Leesburg, 50 percent for Tavares, and 37 percent for the entire county. Lady Lake was also mentioned in the Life Care and Beverly applications as a possible location for their facility, along with other towns in Lake County. Beverly's Vice President has investigated the cost of sites only in Leesburg, Fruitland Park, and Eustis, but concedes that Leesburg is a desirable location due to its proximity to the hospital. Without a CON condition, which AHCA could impose, all three applicants could locate anywhere within Lake County. Although Lady Lake is only 8 miles from Leesburg, Unicare's proposal, all other factors being equal, would be favored as more consistent with local allocation factor 6, which discourages the concentration of nursing homes in one community within a multi- county planning area. The final local allocation factor, 7 (as related to Alzheimers' and adult day care), as well as state health plan factors 3 (as related to Alzheimers') and 4 (as related to adult day care), and subsection 408.035(1)(o), Florida Statutes, favor applicants proposing specialized care or therapies to meet the needs of community and nursing home residents suffering from Alzheimers' and related forms of dementia. Unicare's 20-bed Alzheimers' unit and programs, and half day adult day care for 20 additional Alzheimers' sufferers are consistent with the specialized services that are needed. Life Care also proposes, as conditions for its CON, that it will establish a 20-bed Alzheimers/dementia unit and an adult day care center to accommodate 10 participants a day, between 7:00 a.m. and 6:00 p.m. Beverly proposes to provide services in an 18-bed Alzheimers' wing, and an 8-person adult day care program. State health plan allocation factors met by all of the Lake County applicants include the following: locating in a subdistrict exceeding 90 percent occupancy (approximately 92 percent for planning area 7 for January-June 1993); see, also Subsection 408.035(1)(b), (d), and (2) (a) - (d); proposing to serve 73 percent Medicaid- reimbursed residents in comparison to the subdistrict average of 72.65 percent in the first six month of 1993; and * * * (11) documenting measures and procedures to protect resident's rights and privacy, and the use of resident councils, quality assurance and discharge planning programs. The Lake County applicants' proposals differ more when compared in accordance with state health plan factors and related statutory criteria, for: services to AIDS residents and the mentally ill; respite care, adult day care, and other services in a continuum of care (Sections 408.035(1)(o), F.S.); facilities with designs which maximize residents' comfort and the quality of care, and the costs and methods of construction (Sections 408.035(l)(m), F.S.); innovative therapeutic programs to enhance mental and physical functioning; charges which do not exceed the highest Medicaid per diem rate in the subdistrict (Sections 408.035(2)(e), F.S.); a record of providing superior care in existing nursing homes (Sections 408.035)(1)(c), F.S.); staffing in excess of minimum requirements, with the highest ratio of registered and licensed practical nurses to residents (Sections 408.035)(1)(h), F.S. - availability of staff and personnel); use of professionals from a variety of disciplines; and * * * (12) administrative cost which are lower patient care costs which are higher than the district average. State health plan preference 3 is given to applicants for care to AIDS residents and the mentally ill, and state health plan 4, in part, applies to respite care. Beverly points to its increase in service to HIV positive patients from 39 patients for 124 patient days in 1993 to 3500 patient days in 1994. Unicare also has served AIDS residents. All of the Lake County applicants plan to offer respite care. Beverly offers a wider array of specialized services. By providing a range of levels of care to inpatients and outpatients, including adult day care and respite care, the applicants also, in part, meet the criterion of subsection 408.035(1)(o), Florida Statutes. Nursing homes with more features to enhance resident comfort and quality of care are given state health plan preference 5. Unicare's 58,720 square foot plan, includes semi-private patient rooms designed for the placement of the heads of residents' beds on opposite walls, each side with a window, rather than the alignment of beds next to each other, typical of semi-private hospital rooms. The plan includes indoor wandering space for Alzheimers' residents in a loop around an activity and recreation area, separated by a 3 to 4 foot wall. The Alzheimers' unit has a separate dining room with access to a secured courtyard, which, in turn, connects with the day care center. AHCA's architectural report notes that the construction cost of $60 per gross square foot is below the median cost projection, because Unicare will use a design/build contract. The design/build contract provides for one contractor to provide all of the services, including architectural and design, engineering and construction management, which saves time and money. Unicare's contractor, KM Development Corporation, has been in business since 1977, and has renovated and enlarged Unicare's facilities in Florida without cost overruns, and has done residential construction in the state. Unicare's design, based on the AHCA architectural review and the contractor's testimony, meets requirements for licensure and safety, and is a one-hour fire safety protected structure with a stucco finish, and brick and wood trim. Although skeptical and concerned that the design/build contract can be manipulated to cut corners to stay within budget, AHCA's expert in architecture testified that it is possible for Unicare to build the facility at the projected cost, but he would expect a cost over- run. Life Care's 53,175 square foot building will cost $75 a square foot. AHCA's architects described it as wings organized around a central courtyard, providing good visual control of short corridors. Life Care's design also includes a gift shop, library, and ice cream parlor. A separate wing for Alzheimers residents is adjacent to the adult day care center, with a separate dining room and courtyard. The institutional effect of corridors is decreased by using recessed entrances and doors to residents' rooms. There were no concerns expressed by architectural experts with the appropriateness of the design for the functions in each wing, the adequacy of the project cost, or the safety of the structure. Beverly's construction cost per gross square feet, listed as $63 on line I in response to question 4A was challenged as too low by Life Care's experts. Beverly's construction cost plus a 10 percent contingency or $70 a square foot for 48,969 square feet is considered reasonable by AHCA, although that eliminates the availability of the contingency for unknown conditions on an unselected site. Beverly's design is organized generally around a core area of courtyards with therapy space in the center. Beverly's Alzheimers' unit has a separate courtyard which allows wandering residents to exit a door near one end of the corridor and return by a door near the opposite end. AHCA's architectural review concludes that Beverly's design meets licensure and safety requirements. In general, Unicare's design better meets the preference for enhancing resident comfort and quality of care with rooms over 30 percent larger than required, four outside landscaped areas, physical therapy rooms, and three staff lounges, and an in-service training area, but its cost may be underestimated. Life Care's design is second in terms of accommodating program needs with space arrangements. Adult day care clients with Alzheimers, for example, are located adjacent to the area for Alzheimers residents' programs and activities. Life Care's projected construction costs are also the highest. Innovative therapeutic programs effective in enhancing physical and mental functions are favored in state health plan preference 6. Unicare will provide physical, occupational, and speech therapy and has developed special programs to serve Alzheimers's and related dementia residents and day care clients. Life Care and Beverly will offer IV therapy, wound care, and ventilator and respiratory therapy in addition to other therapies offered by Unicare. Beverly's therapy programs are more innovative and intense, based on the staffing and level of detail provided in describing the proposed services. Preference 7 is given for proposed charges not exceeding the highest Medicaid per diem in the subdistrict. Unicare proposes a Medicaid per diem rate for $86.57 for 120 beds in the second year while at least one provider in the subdistrict for 1997 will be charging $95.27. Unicare computed projected future rates by using 9.1 percent inflation of the Medicaid rate at one facility, which is not necessarily the highest existing provider, which results in a $98.44 rate. Unicare criticized Beverly's use of a 5 percent inflation rate of the highest current provider resulting in a projected rate of $99.47. The highest Medicaid rate in the district, inflated forward to 1997, was $99.31 at the time the application was submitted, so that Beverly's proposed charge of $99.00 is lower, as is Life Care's projected $97.11 and Unicare's $86.57. Preference 8 and subsection 408.035(1)(c) require a comparison of the applicants' records in terms of the quality of care provided in their existing nursing homes, as indicated partly by licensure ratings over the last 36 months. During that time, Unicare's 13 nursing homes have had 468 months of operation at approximately 63 percent superior, 29 percent standard, and 9 percent conditional. Beverly has had a total of 976 months of operations, 67 percent superior, 25 percent standard, and 7 percent conditional. Beverly has also paid a fine to the State of Oregon to settle claims related to patient care problems. The two Florida nursing homes owned by Life Care are rated standard, one in Citrus County opened in November, 1994 and is not yet eligible for a superior license. The other, in Altamonte Springs has been in operation for over 36 months, 29 of those with a superior licensure rating. The three applicants generally have operated and have the capacity to continue to operate superior facilities. Preference 9, on proposed staffing ratios and preference 10 related to the use of varied professional staff are also indications of the quality of care. AHCA requires one registered nurse on the day shift and none on the night shift in a 120-bed nursing home. All of the applicants exceed the minimum. The number of nursing hours per patient day will be 3.2 at Unicare, 3.35 at Life Care, and 3.85 at Beverly. One of four registered nurses on the day shift at Beverly will always be in the subacute unit. However, the ratio outside the unit, for the remaining 100 residents, still exceeds the minimum and meets the preference requirements. All three companies have existing Florida facilities available to provide training and, if needed, transfers of experienced staff to a new nursing home. They currently use and are proposing to continue to use professional staff from a variety of disciplines to meet residents' and clients' needs. Average administrative costs in the district, inflated forward, will be $24.58 and average patient care costs will be $49.49. The applicants report their comparable projections on Schedule 11. Unicare's projected costs are $27.80 and $50.59, respectively. Life Care's costs are $24.84 and $65.94, respectively. Beverly's are $24.44 and $62.30, respectively. With erroneously omitted laundry costs added to administrative costs, Beverly's administrative costs increase to $26.52. All three applicants propose higher administrative costs than the district average, but Life Care's are the lowest. All three have higher than average patient care costs, with Life Care favored as the highest. The following subsections of the CON statutory review criteria do not apply, in this case, to distinguishing among the Lake County applicants: - availability or adequacy of alternatives, such as outpatient care or home care; - economics of joint or shared resources; - need for equipment or services not accessible in adjoining areas; * * * - special needs of health maintenance organizations; - needs of entities which provide substantial services beyond the district; and - impacts on costs and effects of competition. Subsection 408.035(1)(g) - research and educational facilities needs Unicare and Life Care have established foundations to foster education and research in gerontology and health care. Beverly will commit, as a condition for the issuance of its CON, to providing a $10,000 research grant for a gerontological studies to Florida State University. All three companies assist in providing clinical experiences for nursing and therapy students in technical schools, community colleges, and universities, and benefit by recruiting employees from the programs. Subsection 408.035(1)(h) - availability of funds to establish and operate project, and Subsection 408.045(1)(i) - immediate and long-term financial feasibility Unicare has $5 million in available cash and a $30 million line of credit. Unicare, using costs from other facilities adjusted to take into consideration geographical differences, projects a net loss of $250,672 in the first year and a profit of $50,482 in the second year. Unicare failed to include $3,000 in housekeeping equipment in its projected expenses, but can more than cover that omission with a $75,000 contingency. Life Care had a net worth of $50 million in 1993. For calendar year 1992, its audited financial statement shows over $10 million in net earnings and $4.5 million in cash on hand. Life Care projects a net loss of $548,190 in year one and a net profit of $236,022 in year two. Beverly has access to over $200 million for project development, combining its cash, cash equivalents, commercial paper and lines of credit. Beverly projects a pre-tax loss of $314,000 in the first year and a net profit of $214,000 in the second year. Beverly's figures were questioned based on its use of the experience of a Tampa area facility to determine some costs and expenses, its assumption that Medicare will be 13 percent of its patient mix, and its projected lengths of stay and revenues from Medicare. Beverly's use of unit-costs from existing facilities with modifications to fit the specific proposal is reasonable. Although the district Medicare rate is 5.7 percent and Lake County's is 6.1 percent, Beverly's higher proportion of Medicare is consistent with the level of subacute services it proposes in 20 of its 120 beds. After the maximum of 100 days of Medicare coverage, Beverly will have weaned or will transfer ventilator patients who do not have private insurance. Subsection 408.035(1)(n) - past and proposed Medicaid participation Unicare has no nursing homes with CON conditions requiring a specified level of Medicaid participation, having purchased older, existing facilities in Florida. Nevertheless, eleven of its thirteen facilities exceed the Medicaid average in their respective subdistricts. For the first six months of 1993, Life Care's Medicaid resident days were 78 percent in Altamonte Springs (with no CON condition), 70 percent in Punta Gorda, 88 percent and 68 percent, respectively, in the two West Palm Beach nursing homes. Beverly's percent of patient days for Medicaid increased 63.3 percent to 66.8 percent from 1993 to 1994 for facilities in Florida. Beverly paid a $1500 fine to the state for falling below its Medicaid commitment in one of 17 state facilities with such conditions, Coral Trace in Lee County. AHCA agreed to reduce the Coral Trace medicaid condition from 78 percent to 53.3 percent to reflect the subdistrict average. In 1994, at Coral Trace, 49.5 percent of total patient days were Medicaid. All three Lake County applicants have demonstrated strong compliance with Medicaid participation criterion. Comparison of Lake County Applicants On balance, the Lake County applications are all more in compliance than not with statutory review criteria, with varying strengths and weaknesses. They are financially sound, experienced nursing home owners and operators. Unicare will improve access within the planning area. The demographic data on the municipality of Lady Lake shows significant growth. Unicare also will build a better designed and larger facility, and will focus its programs on meeting the needs of Alzheimers' residents and day care participants. Unicare's weaknesses are AHCA's architect's expectation that it will experience cost- overruns and the absence of ventilator services. Unicare relies on its actual experience with Florida construction projects to support the reasonableness of its projections. Unicare also projects the lowest Medicaid per diem rate. Life Care proposes to offer a wider range of specialized programs and therapies than Unicare, a design second to Unicare's in terms of size and residential amenities. Life Care's project costs are the highest of the Lake County applicants, but Life Care, when operational, will have the highest proportion of its costs applied to patient care. Beverly offers a range of programs comparable to those offered by Life Care, with greater emphasis on subacute care, and less emphasis than Unicare on Alzheimers' services. Beverly will build the smallest nursing home at the lowest cost, but is highest in projected Medicaid per diem rate. Unicare is recommended for CON approval due to its superior design, and superior Alzheimers' and day care services, and proposed location. Because the proposed location is a factor in Unicare's favor, it is recommended that Unicare's CON be conditioned on its obtaining a site in Lady Lake. Absent Unicare's agreement to a condition on location, Beverly is recommended for approval based primarily on its lower project cost, scope and intensity of subacute of services, and higher staffing levels.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that AHCA issue CON No. 7489 to Unicare to construct a 120-bed community nursing home in District III, conditioned on the establishment of a 20-bed unit for residents with Alzheimers and related dementia and an adult day care providing half day care for 20 clients, the provision of 73 percent of total resident days to Medicaid residents, and the selection of a site for the facility in the municipality of Lady Lake, Florida. DONE AND ENTERED this 9th day of June, 1995, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of June, 1995. APPENDIX TO RECOMMENDED ORDER, CASES NOs. 94-2452, 94-2453, 94-2462, 94-2467 and 94-2971 To comply with the requirements of Section 120.59(2), Florida Statutes (1993), the following rulings are made on the parties' proposed findings of fact: Petitioner, Dixie's Proposed Findings of Fact. Accepted in Findings of Fact 3 and 8. Accepted in Findings of Fact 3 and 4. Accepted in Findings of Fact 8 and 9. Accepted in Findings of Fact 7. Accepted in general in Findings of Fact 7-9 and 14. Rejected conclusions in Findings of Fact 15-19. Subordinate to Findings of Fact 14. Accepted in Findings of Fact 11 and 24. Accepted in Findings of Fact 7-9. Accepted in or subordinate to Findings of Fact 9. Accepted in part in Findings of Fact 7, rejected in part in Findings of Fact 9. Accepted first sentence in Findings of Fact 9. Rejected second sentence in Findings of Fact 9. Rejected in part in Findings of Fact 9. Rejected in Findings of Fact 9. Accepted in Findings of Fact 9. Subordinate to Findings of Fact 8. Accepted in Findings of Fact 13. Accepted in general in Findings of Fact 13. 19-22. Accepted in Findings of Fact 17-19. 23-24. Accepted in or subordinate to Findings of Fact 15. Accepted in or subordinate to Findings of Fact 30. Accepted in part in Findings of Fact 9. Accepted in Findings of Fact 28. 28-30. Accepted in or subordinate to Findings of Fact 25. 31-32. Accepted in or subordinate to Findings of Fact 30. 33-34. Rejected in Findings of Fact 8 and 22. 35-36. Accepted in or subordinate to Findings of Fact 13. Accepted in Findings of Fact 9. Accepted in or subordinate to Findings of Fact 15. Accepted in Findings of Fact 13. 40-41. Accepted in part in or subordinate to Findings of Fact 13. 42-46. Accepted in Findings of Fact 24 and 35. 47. Rejected in general in Findings of Fact 22. 48-49. Accepted in or subordinate to Findings of Fact 21. 50. Rejected in Findings of Fact 23. 51-52. Rejected in Findings of Fact 21-23. 53-54. Accepted. 55-57. Accepted in Findings of Fact 9 and 22. Accepted in or subordinate to Findings of Fact 21. Accepted in or subordinate to Findings of Fact 15. Rejected in Findings of Fact 21. Accepted in or subordinate to Findings of Fact 13. 62-63. Accepted in Findings of Fact 15. Accepted in Findings of Fact 24 and 31. Accepted in Findings of Fact 11. Accepted in or subordinate to Findings of Fact 9. Accepted in or subordinate to preliminary statement. 68-69. Accepted in Findings of Fact 4 and 9. 70-76. Accepted in Findings of Fact 12. 77-78. Accepted in Findings of Fact 26. 79-80. Accepted in or subordinate to Findings of Fact 12. Petitioner, Life Care's Proposed Findings of Fact. Accepted in Findings of Fact 2 and 3. Accepted in Findings of Fact 2-4. 3-4. Accepted in Findings of Fact 7. Accepted in or subordinate to Findings of Fact 4. Accepted, except 6, in Findings of Fact 51-53. Accepted in general in Findings of Fact 56-67. Accepted in or subordinate to Findings of Fact 53. Accepted in or subordinate to Findings of Fact 61. 10. Accepted in Findings of Fact 42 and 58. 11. Accepted in or subordinate to Findings of Fact 4, 8-10 and 51-53. 12. Accepted in or subordinate to Findings of Fact 54. 13. Accepted in or subordinate to Findings of Fact 51. 14. Accepted in or subordinate to Findings of Fact 7. 15. Accepted in general in Findings of Fact 52. 16. Accepted in Findings of Fact 71. 17. Accepted in or subordinate to Findings of Fact 54-67. 18. Accepted in or subordinate to Findings of Fact 53. 19. Accepted in or subordinate to Findings of Fact 61. 20. Accepted in or subordinate to Findings of Fact 61. 21. Accepted in or subordinate to Findings of Fact 59. Accepted in or subordinate to Findings of Fact 54. Accepted in or subordinate to Findings of Fact 65. Accepted in Findings of Fact 43 and 65. Accepted in or subordinate to Findings of Fact 43. Accepted in or subordinate to Findings of Fact 70. Accepted in or subordinate to Findings of Fact 53 and 56. Accepted in or subordinate to Findings of Fact 58. Accepted in or subordinate to Findings of Fact 54 and 65. Accepted in or subordinate to Findings of Fact 65. Accepted in or subordinate to Findings of Fact 68. 32-34. Accepted in or subordinate to Findings of Fact 66. 35. Accepted in or subordinate to Findings of Fact 68. 36-38. Accepted in or subordinate to Findings of Fact 69. 39-42. Accepted in or subordinate to Findings of Fact 7. 43-44. Accepted in or subordinate to Findings of Fact 66. 45-53. Accepted in or subordinate to Findings of Fact 70. Accepted in or subordinate to Findings of Fact 66. Rejected in Findings of Fact 70. 56-59. Accepted in Findings of Fact 68. 60. Accepted in or subordinate to Findings of Fact 66. 61-65. Accepted in or subordinate to Findings of Fact 58. 66-67. Accepted in or subordinate to Findings of Fact 57. Accepted in Findings of Fact 54. Accepted in or subordinate to Findings of Fact 71. Accepted in Findings of Fact 54. Accepted in Findings of Fact 42. Petitioner, Hilliard Health Care's Proposed Findings of Fact. 1-2. Accepted in Findings of Fact 1. 3-4. Accepted in Preliminary Statement. Accepted in Findings of Fact 13. Subordinate to Findings of Fact 13 and 21. Accepted in Findings of Fact 13. 8-9. Accepted in Findings of Fact 11. Accepted in Findings of Fact 15. Accepted. 12-15. Accepted in Findings of Fact 24. Accepted in Findings of Fact 24 and 31. Accepted in Findings of Fact 31. Accepted in or subordinate to Findings of Fact 8. Accepted in or subordinate to Findings of Fact 15 and 30. Accepted in or subordinate to Findings of Fact 3, 4 and 9. Accepted in Findings of Fact 15 and 30. Accepted in Findings of Fact 15. Accepted in or subordinate to Findings of Fact 28 and 31. Accepted in or subordinate to Findings of Fact 24 and 31. Accepted in Findings of Fact 16, 24 and 30. 26-27. Accepted in or subordinate to Findings of Fact 11, 15 and 22. Accepted in or subordinate to Findings of Fact 30. Accepted in or subordinate to Findings of Fact 16 and 30. Accepted in Findings of Fact 30. 31-34. Accepted in part in Findings of Fact 17-19. Accepted in Findings of Fact 30. Accepted in relevant part in Findings of Fact 17-19. 37-38. Accepted in Findings of Fact 30. Accepted in Findings of Fact 16 and 30. Accepted in Findings of Fact 30. Accepted in Findings of Fact 16-19. Accepted in Findings of Fact 30. Accepted in Findings of Fact 16-19. Accepted in Findings of Fact 30. Rejected in Findings of Fact 15. Accepted in Findings of Fact 3. Accepted in general in Findings of Fact 7 and 8. 48-49. Accepted in Findings of Fact 9. Accepted in Findings of Fact 7. Rejected as "lowest need" in Findings of Fact 7. 52-61. Accepted in or subordinate to Findings of Fact 5, 6 and 22. 62-65. Accepted in or subordinate to Findings of Fact 14-16 and 23. Accepted. Rejected in Findings of Fact 8. Accepted in general in Findings of Fact 5-9. Accepted in Findings of Fact 9. Accepted in Findings of Fact 5-9. Accepted in Findings of Fact 5-9 and 24. Accepted in Findings of Fact 25. Accepted in general in Findings of Fact 16-19. Rejected as not at issue. Accepted in Findings of Fact 28. Subordinate to Findings of Fact 30. 77-79. Accepted in or subordinate to Findings of Fact 24 and 30. 80-85. Accepted in or subordinate to Findings of Fact 31-36. Rejected except first sentence in Findings of Fact 21. Rejected in Findings of Fact 21. 88-91. Accepted in or subordinate to Findings of Fact 21-22. 92. Accepted in Findings of Fact 8. Respondent, AHCA's Proposed Findings of Fact 1. Accepted in Findings of Fact 13. 2-6. Accepted in or subordinate to Findings of Fact 11. 7. Accepted in Findings of Fact 12. 8-9. Accepted in or subordinate to Findings of Fact 47-49. 10-12. Accepted in or subordinate to Findings of Fact 39-41. 13-16. Accepted in or subordinate to Findings of Fact 24-26. Accepted in or subordinate to Findings of Fact 42-44. Accepted. 20-23. Accepted in or subordinate to Findings of Fact 4-9. 24. Accepted. 25-26. Accepted in Findings of Fact 15. 27-28. Accepted in Findings of Fact 15, 24-30 and 54. Accepted in or subordinate to Findings of Fact 67. Accepted in preliminary statement and Finding of Fact 1. Accepted in Findings of Fact 15, 31, and 54. Accepted in or subordinate to Findings of Fact 15, 30 and 55. 33-35. Accepted in or subordinate to Findings of Fact 16-19. Rejected in Findings of Fact 22. Accepted in Findings of Fact 66. Accepted in Findings of Fact 61. 39-40. Accepted in or subordinate to Findings of Fact 56. Accepted in Findings of Fact 60. Accepted in or subordinate to Findings of Fact 54. Accepted in or subordinate to Findings of Fact 53 and 56. Accepted in or subordinate to Findings of Fact 47 and 61. Accepted in or subordinate to Findings of Fact 47 and 56. 46-48. Accepted in or subordinate to Findings of Fact 66. Accepted in or subordinate to Findings of Fact 65. Accepted in or subordinate to Findings of Fact 69. 51-52. Accepted in or subordinate to Findings of Fact 13 and 21. Conclusion rejected in Findings of Fact 21 and 23. 53-55. Accepted in or subordinate to Findings of Fact 13. 56. Rejected in Findings of Fact 22. 57-58. Accepted in or subordinate to Findings of Fact 15 and 21. 59. Rejected in Findings of Fact 22 and 23. 60-64. Accepted in or subordinate to Findings of Fact 49 and 70. 65-66. Rejected in Findings of Fact 70 and in conclusions of law 76. 67. Accepted in Findings of Fact 67. 68-69. Accepted in or subordinate to Findings of Fact 15. 70-75. Accepted in or subordinate to Findings of Fact 57-60, except "probable" in last sentence of proposed findings of fact 74. (See, T-p 2197.) Accepted in Findings of Fact 30. Accepted in Findings of Fact 11 and 15. Accepted in Findings of Fact 54 and 71. Accepted in Findings of Fact 54. Accepted in Findings of Fact 31. Petitioner/Respondent, Beverly's Proposed Findings of Fact. Accepted in preliminary statement and Findings of Fact 1. Accepted in preliminary statement and Findings of Fact 1 and 37. Accepted in preliminary statement and Findings of Fact 1. Accepted in Findings of Fact 45 and 46. Accepted in preliminary statement. Accepted in Findings of Fact 48. Accepted in Findings of Fact 47. Accepted in Findings of Fact 43. Accepted in Findings of Fact 42. Accepted in Findings of Fact 51. Accepted in Findings of Fact 6. Accepted in Findings of Fact 27. Accepted in or subordinate to Findings of Fact 37 and 50. 16-17. Accepted in or subordinate to Findings of Fact 51. Accepted in or subordinate to Findings of Fact 52. Rejected in general in Findings of Fact 52. 20,22. Accepted in or subordinate to Findings of Fact 51 and 54. 23-24. Accepted in or subordinate to Findings of Fact 39, 42 and 47. 25 Accepted in Findings of Fact 39, 42, 47 and 56. Accepted in or subordinate to Findings of Fact 56. Accepted in Findings of Fact 56. 28-29. Accepted in relevant part in Findings of Fact 59 and 60. 30. Accepted in Findings of Fact 61. 31-32. Accepted in or subordinate to Findings of Fact 62, 63 and 64. Accepted in Findings of Fact 65. Subordinate to Findings of Fact 65. Rejected as speculative. Rejected conclusion in Findings of Fact 65. Accepted in general in Findings of Fact 65. Accepted in Findings of Fact 66. Accepted in general except conclusion in Findings of Fact 66. 40-42. Accepted in or subordinate to Findings of Fact 66. Accepted in or subordinate to Findings of Fact 54. Accepted in Findings of Fact 67. Accepted in Findings of Fact 50. Rejected conclusion in Findings of Fact 65. Accepted in Findings of Fact 68. Accepted in or subordinate to Findings of Fact 66 and 68. Accepted in Findings of Fact 68. 50-51. Accepted in Findings of Fact 69. Accepted in Findings of Fact 66. Accepted in Findings of Fact 70. 54-55. Accepted in or subordinate to Findings of Fact 70. 56-58. Accepted in or subordinate to Findings of Fact 70. Rejected, as irrelevant based on previous interpretations by AHCA, in Findings of Fact 68. Accepted in Findings of Fact 68. Accepted in or subordinate to Findings of Fact 54. 62-64. Accepted in or subordinate to Findings of Fact 57-60. 65-66. Accepted in or subordinate to Findings of Fact 54 and 71. 67. Accepted, but list not construed as exclusive in Findings of Fact 56. 68-69. Accepted in Findings of Fact 50. Accepted in preliminary statement and subordinate to Findings of Fact 50. Accepted in Findings of Fact 50. Accepted in or subordinate to Findings of Fact 54 and 71. Petitioner, Unicare's Proposed Findings of Fact. 1. Accepted in Findings of Fact 37 and 39. 2-3. Accepted in Findings of Fact 39. Accepted in Findings of Fact 40, 41, and 66. Subordinate to preliminary statement. Accepted in Findings of Fact 1. 7-8. Accepted in or subordinate to Findings of Fact 5-8 and 51. Accepted in Findings of Fact 39. Accepted in Findings of Fact 40. Subordinate to preliminary statement and Findings of Fact 39. 12-13. Accepted in or subordinate to Findings of Fact 70. 14-16. Accepted in relevant part in Findings of Fact 52. 17. Accepted in or subordinate to Findings of Fact 66. 18-22. Accepted in or subordinate to Findings of Fact 70. Accepted in Findings of Fact 54 and 71. Accepted. Subordinate to Findings of Fact 65. 26-27. Accepted in or subordinate to Findings of Fact 54. Accepted in preliminary statement. Accepted in or subordinate to Findings of Fact 56. Accepted in or subordinate to Findings of Fact 65. 31-32. Accepted in or subordinate to Findings of Fact 66. Accepted in Findings of Fact 57. Accepted in Findings of Fact 66. Subordinate to Findings of Fact 54. 36-39. Accepted in or subordinate to Findings of Fact 53. 40-41. Accepted in or subordinate to Findings of Fact 57 and 60. Accepted in or subordinate to Findings of Fact 69. Accepted in or subordinate to Findings of Fact 57 and 60. 44-48. Accepted in Findings of Fact 39 and 61. 49-52. Accepted in or subordinate to Findings of Fact 53 and 56. 53-62. Accepted in or subordinate to Findings of Fact 57 and 60. 63-68. Accepted in or subordinate to Findings of Fact 70. Accepted in or subordinate to Findings of Fact 66. Accepted in Findings of Fact 70. 71-75. Accepted in or subordinate to Findings of Fact 7 and 51. 76-78. Accepted in or subordinate to Findings of Fact 52. 79. Accepted in Findings of Fact 53. 80-81. Accepted in or subordinate to Findings of Fact 54. 82-83. Accepted in or subordinate to Findings of Fact 56. 84. Accepted in or subordinate to Findings of Fact 57 and 60. 85-86. Accepted in or subordinate to Findings of Fact 61. Accepted in Findings of Fact 64. Accepted in Findings of Fact 65. 89-90. Accepted in or subordinate to Findings of Fact 66. Accepted in Findings of Fact 54. Accepted in Findings of Fact 67. 93-94. Accepted in or subordinate to Findings of Fact 57, 59 and 60. 95. Accepted in or subordinate to Findings of Fact 70. 96-103. Rejected as having been modified and adjusted in Findings of Fact 70. Accepted in Findings of Fact 64. Rejected in Findings of Fact 64. Accepted in general in Findings of Fact 67. Rejected in Findings of Fact 66 and 67. Accepted in Findings of Fact 52. Accepted in or subordinate to Findings of Fact 65. Accepted in or subordinate to Findings of Fact 60. Accepted in Findings of Fact 57-60. Accepted in Findings of Fact 42 and 44. Accepted in Findings of Fact 42. Rejected as not supported by the record. Accepted in Findings of Fact 45 and 46. Accepted in Findings of Fact 64. Accepted in or subordinate to Findings of Fact 66. Accepted in Findings of Fact 61. Accepted in Findings of Fact 57. COPIES FURNISHED: Douglas L. Mannheimer, Esquire Jay Adams, Esquire Broad & Cassel Post Office Box 11300 Tallahassee, Florida 32302 Theodore E. Mack, Esquire Cobb, Cole & Bell 131 North Gadsden Street Tallahassee, Florida 32301 W. David Watkins, Esquire Patricia Renovitch, Esquire Oertel, Hoffman, Fernandez & Cole 2700 Blair Stone Road, Suite C Post Office Box 6507 Tallahassee, Florida 32314-6507 R. Bruce McKibben, Jr., Esquire Pennington, Haben, Wilkinson,Culpepper, Dunlap, Dunbar, Richmond & French, P.A. 215 South Monroe Street, 2nd Floor Post Office Box 10095 Tallahassee, Florida 32302 Lesley Mendelson, Esquire Agency for Health Care Administration 325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131 R. S. Power, Agency Clerk Agency for Health Care Administration Atrium Building, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Tom Wallace Assistant Director Agency For Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303
The Issue Whether Rule 59C-1.036 constitutes an invalid exercise of delegated legislative authority, and; Whether the Agency's application form and scoring system utilized in the review of nursing home batch certificate of need applications constitute rules of the Agency as the term "rule" is defined in Section 120.52(16), employed in violation of Section 120.535, Florida Statutes (1993) and; Whether the disputed form and scoring system constitute an invalid exercise of delegated legislative authority.
Findings Of Fact The disputed rule in this case is Rule 59C-1.036(1), Florida Administrative Code, which provides in pertinent part: The community nursing home beds subject to the provisions of this rule include beds licensed by the agency in accordance with Chapter 400, Part I, Florida Statutes, and beds licensed under Chapter 395, Florida Statutes, which are located in a distinct part of a hospital that is Medicare certified as a skilled nursing unit. All proposals for community nursing home beds will be comparatively reviewed consistent with the requirements of Subsection 408.39(1), Florida Statutes, and consistent with the batching cycles for nursing home projects described in paragraph 59C-1.008(1)(l), Florida Administrative Code. The challenged rule is entitled "Community Nursing Home Beds," and also includes the "need methodology" for determining the need for community nursing home beds and specifically: regulates the construction of new community nursing home beds, the addition of new community nursing home beds, and the conversion of other health care facility bed types to community nursing home beds... Also pertinent to this case, the challenged rule provides: The Agency will not normally approve applications for new or additional community nursing home beds in any agency service subdistrict if approval of an application would cause the number of community nursing home beds in that agency subdistrict to exceed the numeric need for community nursing home beds, as determined consistent with the methodology described in paragraphs (2)(a), (b), (c), (d), (e), and (f) of this rule. The challenged rule has the effect of, among other things, requiring nursing homes and hospitals who seek to operate skilled nursing facility beds to file applications for community nursing home beds in the same batching cycle, compete against each other for those beds in nursing home subdistricts and be subject to the need methodology applicable to nursing home beds. The Agency has not developed a need methodology specifically for Medicare certified distinct part skilled nursing units. In 1980, the Agency's predecessor, the Department of Health and Rehabilitative Services, attempted to promulgate rules with the same effect of the rules challenged in this case. In Venice Hospital, Inc. v. State of Florida, Department of Health and Rehabilitative Services, 14 FALR 1220 (DOAH 1990) 1/ the Hearing Officer found the challenged rule in that case to be invalid and concluded, as a matter of law, that, with respect to the previous proposed rule: The competent, substantial evidence shows that these proposed rules are not reasonable or practical and will lead to an illogical result. There exists an inadequate factual or legal basis to support the forced inclusion of hospital-based skilled nursing beds into the community nursing bed inventory. In the 1990 challenge to the previously proposed rule, the Hearing Officer concluded that the proposed rule in question was an invalid exercise of delegated legislative authority, but also found that, from a health planning standpoint, reasons existed for and against the inclusion of hospital-based skilled nursing units within the nursing home bed inventory. In the instant proceedings, the Agency concedes that the challenged rule and the previous proposed rule are substantially identical. In this case, the parties defending the challenged rule presented several facts, many of which seek to establish changed circumstances since 1990, as evidence of a rational basis for the inclusion of hospital-based skilled nursing units within the nursing home bed inventory. Facts Established Which Arguably Support the Validity of the Challenged Rule Although the term "subacute care" does not have a generally accepted definition, this term is often applied to that care provided patients in skilled nursing units. Subacute care is an emerging and developing area of care which covers patients whose medical and clinical needs are higher than would be found in a traditional nursing home setting, but not so intense as to require an acute medical/surgical hospital bed. Subacute care is a level of care that is being developed to bridge a gap between hospital and traditional nursing home care and to lower the cost of care to the health delivery system. Both hospitals and nursing homes operate Medicare-certified distinct part skilled nursing facility units. The same criteria, including admissions criteria, staffing requirements and reimbursement methodologies, apply to such skilled nursing units, in hospitals and freestanding nursing homes. The patient population served in such units is primarily a population which comes to either a hospital or nursing home-based unit from an acute care hospital stay. This population group has a short length of stay in the Medicare distinct part unit and can be rehabilitated within a certain period of time. Skilled nursing units in hospitals and those in freestanding nursing homes are competing for the same patient population. Both hospitals and nursing homes are aggressively entering the subacute care market. There are some nursing homes which provide a level of subacute care equal to that provided by hospitals. As a general rule, the staffing, clinical programs, patient acuity and costs of care for patients do not substantially vary between skilled nursing units in hospitals and such units in freestanding nursing homes. In the past two or three years, the number of Florida nursing homes which compete for skilled unit patients has increased. In applications for skilled nursing unit beds, the services proposed by hospitals and those proposed by nursing homes are generally similar. Medicare-certified distinct part units in both freestanding nursing homes and hospitals are certified to provide the same nursing services. The types of services and equipment provided by hospital skilled nursing units and nursing home skilled nursing units are similar. There has been an increase in subacute care in the past five years. The average length of stay for patients treated in Medicare-certified distinct part nursing units in hospitals and in such units located in freestanding nursing homes is similar. The federal eligibility requirement for Medicare patients in hospital- based and in freestanding nursing home distinct part skilled nursing units are the same. Some skilled nursing units which are located in nursing homes have historically received patient referrals from hospitals. When these referring hospitals develop distinct part Medicare certified skilled nursing units, the nursing home skilled nursing units tend to experience a decline in occupancy. Uniform need methodology is developed in part based upon demographic characteristics of potential patient population. Nursing home bed need methodology utilizes changes in population by age groups over age 65 to project need for beds. Both hospital-based skilled nursing units and nursing home-based units serve substantial numbers of Medicare-eligible patients who are 65 years of age and older. Population health status is also utilized in developing uniform need methodologies. The health status of service population for Medicare units in freestanding nursing homes is, as a general rule, the same as the health status of population served in such units located in hospitals. The intent behind the process of reviewing CON applications from hospitals seeking skilled nursing unit beds and nursing homes seeking such beds is to reduce the risk of overbedding and duplication of services. Overbedding and duplication of services have the tendency to result in excessive costs and can result in deterioration of quality of care. Medicare admissions to nursing homes and Medicare revenue to nursing homes have increased in the past several years. Data also indicates that nursing homes are beginning to provide more intensive care for patients in skilled nursing units. The prevalence of freestanding nursing home Medicare-certified skilled nursing units has substantially increased in the past three years and this growth trend is expected to continue. Facts Established Which Demonstrate That the Challenged Rule Should be Declared Invalid The challenged rule requires a hospital seeking Medicare-certified skilled nursing unit beds to be comparatively reviewed with nursing home applications seeking all types of nursing home beds. There is no separate nursing home licensure bed category for skilled nursing unit beds. The Agency's inventories of freestanding nursing home beds do not identify Medicare-certified skilled nursing beds. Once an applicant to construct a nursing home opens the nursing home, the applicant does not need a separate CON to designate beds as a Medicare- certified skilled nursing unit. According to the AHCA's own witness, a freestanding nursing home can internally change its categories at any time without CON review. Pursuant to statute and agency rule, however, hospitals must obtain a CON to change the category of even one bed. 2/ Although a hospital seeking hospital licensed Medicare-certified skilled nursing beds is compelled by Rule 59C-1.036(1), Florida Administrative Code, to compete against all nursing home applicants and all nursing home beds in a batched review, it faces totally different standards of construction, operation and staffing after approval. Rule 59C-1.036(2), Florida Administrative Code, is the nursing home bed need formula. This formula does not result in an estimate of need for skilled nursing unit beds and projects need for total community nursing home beds only. There is currently no bed need methodology (hospital or nursing home) to ascertain the need for Medicare certified skilled nursing unit beds. The Agency's inventories of freestanding nursing home beds do not separately identify Medicare-certified skilled nursing home beds in nursing homes. All that is shown is whether the beds are "community nursing home beds" or "sheltered nursing home beds." The Agency has not established how, under this inventory and regulatory scheme, it controls overbedding in Medicare- certified skilled nursing units within a specific district or subdistrict since the only such beds shown on the inventories are those in hospitals. It is unreasonable and illogical to compare the need for hospital- based Medicare-certified skilled nursing unit beds with the need for all community nursing home beds. Under the present circumstances a reasonable comparison might be drawn between need for hospital-based skilled nursing unit beds and freestanding nursing home skilled nursing unit beds, but the AHCA rules do not currently provide for such a comparison. Determining the need for hospital-based skilled nursing unit beds by comparing such beds to all nursing unit beds constitutes poor health planning. Such hospital-based skilled nursing units do not provide similar services to similar patients when compared to all community nursing home beds and it is neither logical or reasonable to comparatively review the need for such services. The challenged rule also requires hospital applicants for skilled nursing unit beds to compete with nursing homes within the nursing home subdistrict. The Agency by rule divides districts differently for nursing homes than for hospitals. Thus, some hospitals' skilled nursing unit beds are comparatively reviewed against nursing home beds of all kinds and against hospital skilled nursing beds which are not within the same hospital subdistrict. As a general statement, the treatment profiles for patients in Medicare-certified skilled nursing units in hospitals and those for patients in nursing homes skilled nursing units are similar. There is, however, a distinct part of such patient population which must be treated in a setting which provides immediate access to emergency care. The provision of immediate emergency care is not typically available in nursing homes and nursing home patients in need of such care usually have to be readmitted to hospitals. Care available in hospitals (physicians and registered nurses on duty at all times, laboratory and radiation services available on premises) is sufficiently different to demonstrate that Medicare-certified skilled nursing units are not comparable to such units in freestanding nursing homes in all aspects. This distinction is clearly significant to patients who need emergency services because of age, multiple illnesses, and other conditions. Chapter 395, Florida Statutes, is the hospital licensure statute. Section 395.003(4), Florida Statutes, provides: The Agency shall issue a license which specifies the service categories and the number of hospital beds in each category for which a license is received. Such information shall be listed on the face of the license. All which are not covered by any specialty-bed-need methodology shall be specified as general beds. The Agency equates "acute care" beds with general beds. By rule, the Agency has excluded from the definition of "acute care bed": neonatal intensive care beds comprehensive medical rehabilitation beds hospital inpatient psychiatric beds hospital inpatient substance abuse beds beds in distinct part skilled nursing units, and beds in long term care hospitals licensed pursuant to Part I, Chapter 395, Florida Statutes. By Agency rule, a hospital specialty need methodology exists for all categories of hospital beds excluded from the acute care bed definition except category (e) beds in distinct part skilled nursing units and (f) long term care beds. The Agency is currently drafting a specialty hospital bed need methodology for long term care beds. The only licensed bed category for which the Agency has developed no specialty bed need methodology (existing or in process) is hospital beds in distinct part skilled nursing units. At hearing, the Agency presented the testimony of Elfie Stamm who was accepted as an expert in health planning and certificate of need policy analysis. Through Ms. Stamm's testimony, the Agency attempted to establish that the numeric need methodology established by the challenged rule includes a calculation of the need for both nursing home and hospital-based distinct part skilled nursing units. This testimony was not persuasive on this point. Indeed, Ms. Stamm acknowledged that the disputed rule does not result in an estimate of need for skilled nursing units or beds. The parties to this proceeding have attempted to establish that Medicare admission statistics in Florida support either the validity or invalidity of the challenged rule. Based upon the Medicare-related statistical data placed in the record in this case, it is more likely than not that, as of 1992, in excess of 90 percent of utilization of hospital-based skilled nursing units is Medicare covered and that the percentage of Medicare (as opposed to Medicaid) patient days in all freestanding nursing home beds was only seven percent. In this respect, it is not logical or reasonable to comparatively review the need for hospital-based Medicare-certified skilled nursing unit beds with all community nursing home beds. 47. The Agency lists Sections 408.15(8), 408.34(3)(5), 408.39(4)(a) and 400.71(7), Florida Statutes, as specific statutory authority for the challenged rule. None of the cited statutory provisions provides specific authority for the Agency to require hospitals seeking hospital licensed beds in Medicare- certified skilled nursing units to be reviewed against all community nursing home beds. There is no evidence of record in this case of any federal law requiring such review and no evidence to suggest that Medicare reimbursement is affected by such a review one way or the other. In this case, the competent, substantial evidence shows that the disputed rule is not reasonable or rational. The Agency has not developed a specific numerical need methodology providing for a reasonable and rational basis to comparatively review the need for Medicare-certified skilled nursing unit beds in hospitals or in nursing homes. There exists an inadequate factual or legal basis to support the forced inclusion of hospital-based skilled nursing units into the inventory of all community nursing home beds. Form 1455A Agency Form 1455A and the scoring methodology are used by the Agency in the review of applications for community nursing home beds and for skilled nursing facilities within distinct parts of a hospital. Various parties in this proceeding assert the Form 1455A and the scoring methodology constitute unpromulgated rules which are invalid pursuant to Section 120.535, Florida Statutes. Any party filing a letter of intent concerning community nursing home beds receives from the Agency an application package including Form 1455A and instructions. The instructions are an integral part of the application. Also included as part of the application are 34 pages of instructions on how the Agency scores the application. Form 1455A has general applicability to all applicants for community nursing home beds and for skilled nursing home facilities within distinct parts of a hospital. Form 1455A contains numerous provisions of mandatory language which facially provides that it must be submitted with applications for CON. The Agency acknowledges that such mandatory language predated the passage of Section 120.535, Florida Statutes, and considers the language obsolete. The Agency intends, in the future, to edit the form to strike "misleading language". Form 1455A is not incorporated in any rule of the Agency and has not been promulgated as a rule. Applications are reviewed based upon questions in Form 1455A. Applications are also reviewed against a numerical scoring system developed with the form. The form requires that the applicant certify that it will obtain a license to operate a nursing home. The form also requires certification that the applicant participate in Medicaid services which are not applicable to hospitals. These and other portions of the form are not rationally or reasonably related to the operation of a hospital-based distinct part skilled nursing unit. In the review and analysis of the applications at issue, a "scoring methodology" is used by the Agency. The scoring matrix is utilized to put numerous applications filed in the same agency district in perspective in terms of numerical ranking and how the applications compare to each other. The State Agency Action Report is the end product of the Agency review of the applications. The scoring system is used in the review proceedings and is utilized and included in at least some of the State Agency Action Reports. Form 1455A and the scoring methodology are utilized by the Agency in a manner that has general application and which forms significant components of a process which creates rights, and which implements, interprets, and prescribes law and Agency policy. At the final hearing, the Agency presented the testimony of Ms. Elizabeth Dudek, the Agency Chief of the Certificate of Need and budget review offices. Ms. Dudek was accepted as an expert in CON policy and procedure. Ms. Dudek provided an overview of the process whereby the challenged form and scoring system are used by the Agency in analyzing CON applications. Ms. Dudek testified that the Agency does not believe the form and scoring system meet the requirements of a rule. Ms. Dudek considers the form and system to be tools used to elicit responses in a standardized format. The fact that an application receives a high score based on the scoring matrix does not mean that the application will be approved. Ms. Dudek is of the opinion that the form and scoring system do not competitively disadvantage hospitals competing with nursing homes. Ms. Dudek cited the most recent batch cycle in which twelve hospitals were awarded distinct part nursing units, although these hospitals' applications did not receive the highest scores. Ms. Dudek's testimony was not persuasive in the above-referenced areas. As currently structured and utilized by the Agency, the form and the scoring system at issue are not reasonable or rational. There is not an adequate factual or legal basis to support the use of the form or the scoring system in analyzing applications for CON files by hospitals for distinct part Medicare-certified skilled nursing units.
Findings Of Fact Petitioner, Florida Convalescent Centers, Inc. (FCC), filed an application with respondent, Department of Health and Rehabilitative Services (HRS), on October 14, 1983, seeking a certificate of need authorizing the construction of a 120-bed skilled and intermediate care nursing home facility in Manatee County, Florida. /1 The proposed project carries an estimated cost of $3,530,000. After reviewing the application, HRS issued its proposed agency action on February 21, 1984, in the form of a state agency action report in which it advised petitioner that it intended to deny the application. The report stated in part that "(e)xisting and approved bed capacity in Manatee County... is sufficient to satisfy projected need for 1986," that 240 nursing home beds had just been approved for the county, and when added to the existing nursing home supply, would "maintain a reasonable subdistrict occupancy level through 1986 and satisfy the need for additional beds in Manatee County." The service area in which FCC proposes to construct its new facility is the Manatee County subdistrict of HRS District 6. That district contains five counties, including Manatee. In order to determine need, HRS has adopted Rule 10-5.11(21), Florida Administrative Code, which contains a formula (or methodology) for determining need at both the district and subdistrict level. Under that formula, HRS is required to utilize the "most recent 6 month nursing home utilization in the subdistrict." In this regard, HRS prepares on an on- going basis an internal document entitled "Quarterly Report" which contains the latest available data over a six-month period. In this proceeding, HRS used a report containing data for the period October, 1983, through March, 1984. This was the most current and complete available data at the time of hearing. According to the methodology in Rule 10-5.11(21), there is a gross need in District 6 for 7,336 nursing home beds. At the same time, there are presently 4,910 licensed and 960 approved beds in the District. Therefore, this results in a district-wide shortage of 1,466 nursing home beds through the year 1987, which is the three year planning horizon used by HRS in determining need. Evidenced introduced by HRS indicated there are presently 765 licensed and 240 approved beds in Manatee County. Under the rule, the methodology reflects a need for 1,518 beds, or a subdistrict deficiency of 513 beds through the year 1987. But even if beds are mathematically required under the formula at the subdistrict level, the rule requires that the current utilization of existing facilities be at least 85 percent, and the prospective utilization rate exceed 80 percent. If they do not, no additional beds may be authorized. The current utilization rate in Manatee County is 91.7 percent which meets the 85 percent threshold. However, the prospective utilization rate for the existing and approved operating nursing homes within the county is 69.8 percent, or substantially less than the minimum threshold of 80 percent called for by the rule. If petitioner's proposed beds are added to the calculation, the prospective utilization rate drops to 62.9 percent, or far below the requisite minimum rate. Therefore, there is no need for additional beds in Manatee County. FCC points out that special circumstances are present which justify a deviation from the rule. These include the allocation under the rule of only 15 percent of the district beds to Manatee County even though 21 percent of the elderly population (over 65 years) resides within the county, and the fact that Manatee has the highest percentage of people over 75 years of age of any county within the district. FCC also contends that the county has more persons in poverty than the statewide average, and that it will dedicate some 50 percent of its beds to Medicaid patients if the application is approved. However, these factors are taken into account in the formula devised by HRS, and do not constitute special circumstances that would warrant a departure from the need calculation encompassed in the rule.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application of Florida Convalescent Centers, Inc., for a certificate of need to construct a 120-bed skilled and intermediate care nursing home facility in Manatee County, Florida be DENIED. DONE and ORDERED this 31st day of October, 1984, in Tallahassee, Florida. DONALD R. ALEXANDER 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, 1984.
