Findings Of Fact On 22 June 1982 DHRS, Office of Licensure and Certification, conducted an inspection of Respondent's facility known as Regency Oaks at Gainesville, Florida. During this inspection the nurses' schedule was not produced and the inspector, with the assistance of Respondent's staff, attempted to reconstruct the nurses' schedule for the month of June, 1982, up to the date of the inspection. From the data received it was determined that on the 7:00 a.m. to 3:00 p.m. shift on June 5, 1982, Respondent was staffed with one registered nurse (RN) and three licensed practical nurses (LPN) on June 6 there were two RN's and two LPNs; on June 12 there were three RNs and one LPN; and on June 19 there were three RNs and one LPN. Staffing requirements for nursing homes are determined by the shift and census of the nursing home. All of the shortages here involved the day shift. On each of the days of 5, 6, 12, and 19 June the regulations required two RNs and three LPNs on the day shift. The regulations also permit the substitution of an RN for an LPN. Accordingly, from the evidence gathered bv Petitioner's evaluation at the June 22 inspection, Respondent was short one RN on June 5 and one LPN on June 6, 12, and 19. Respondent presented time cards for the periods here involved. These time cards, which were accepted in evidence as business records of Respondent, show that on June 12 Respondent had two RNs and three LPNs on duty on the day shift. Respondent's one witness admitted the nursing home was understaffed one RN on June 5 and one LPN on June 6 and 19.
The Issue Whether the Department of Health and Rehabilitative Services should approve the application for certificate of need (CON) of any one or more of five applicants for community nursing home beds in Lee County for the July 1989 planning horizon.
Findings Of Fact The Applicants Applications for certificates of need (CON) for nursing homes are accepted by the Department of Health and Rehabilitative Services (Department) in batching cycles and are subject to competitive review. The Department comparatively reviewed and analyzed 13 individual applications for proposed nursing services for District VIII, Lee County, in the July, 1986 nursing home batching cycle. Five of those applications are at issue for purposes of this proceeding. Pertinent to this proceeding, petitioner, Maple Leaf of Lee County Health Care, Inc., a wholly owned subsidiary of Health Care and Retirement Corporation of America (HCR filed an application for a 120-bed nursing home (CON 4746), petitioner Forum Group, Inc. (Forum), filed an application for a 60-bed nursing home (CON 4755), petitioner, Health Quest Corporation (Health Quest), filed an application for a 60-bed nursing home (CON 4747), petitioner, Hillhaven, Inc., d/b/a Hillhaven Health Care Center Lee County (Hillhaven) filed an application for a 120-bed nursing home (CON 4756), and respondent, Gene Lynn d/b/a Careage Southwest Healthcare Center (Careage) filed an application for a 120-bed nursing home (CON 4748). Each of these applications was timely filed. The Department's "preliminary" action The Department is the state agency charged with implementing and regulating the CON program for medical facilities and services in Florida. Within the Department, the Office of Community Medical Facilities is responsible for the review of CON applications and provides a recommendation for approval or disapproval after its analysis is concluded. The Department assigned the subject District VIII applications for the July, 1986 hatching cycle to Medical Facilities Consultant Robert May for review. Mr. May was supervised in his work by Elizabeth Dudek, an experienced Medical Facilities Consultant Supervisor, who has reviewed or supervised the review of approximately 1200 CON applications. Robert Nay and Elizabeth Dudek concurred in their evaluations of the applications and recommended that Hillhaven's application be approved for 60 beds in Lee County. This recommendation was forwarded to the Administrator of the Office of Community Medical Facilities, Robert E. Naryanski, who also occurred with the recommendation on or about December 20, 1986, and forwarded the recommendation to Marta Hardy, Deputy Assistant Secretary for Health Planning and Development, for final approval. An unusual set of circumstances evolved from that approximate point in time with respect to the applications at issue. Sometime in late November 1986 Marta Hardy talked to Robert Sharpe, Administrator of the Office of Comprehensive Health Planning, concerning the applications in this batching cycle and stated that she intended to involve him in the review procedure. In late December, she asked Mr. Sharpe to review the applications for four of the counties in the cycle, including Lee County. Mr. Sharpe is in a separate and distinct part of the Department, which reports to the Deputy Assistant Secretary but does not, in the ordinary course of operations, review certificate of need applications. Mr. Sharpe's involvement with reviewing nursing home applications had never occurred before and has not occurred since. However, Mr. Sharpe has been involved on limited occasions with reviewing hospital CON applications in preparation for administrative hearings. Careage had a CON application in each of the four districts that Mr. Sharpe was asked to review. Mr. Sharpe was not asked to review any other districts other than the four districts in which Careage had applications pending. In Mr. Sharpe's conversation with Ms. Hardy, Ms. Hardy specifically mentioned Careage while expressing her concern about the Department's ability to discriminate the best applicants on the basis of quality of care. Ms. Hardy mentioned no other applicant by name. Mr. Sharpe, in all circumstances, recommended Careage for approval. Mr. Sharpe did not attempt to do a complete re-review the applications, and did not redo any part of the review that had been performed by the Office of Community Medical Facilities specifically the need calculations and comparing the applications to the statutory review criteria. Mr. Sharpe did not apply statutory review criteria in his review of the applications because it had been determined that all the applicants were minimally qualified and met the statutory review criteria. Mr. Sharpe felt that the responsibility of his office was simply to do a comparative review to determine the best applicant. Mr. Sharpe placed information in the applications into what has been termed a "matrix." The purpose of the matrix was to present the information in the applications in a format which would facilitate a comparative analysis based on a greater number of factors than had previously been considered. Traditionally, the predominant factors utilized by the Department in reviewing applications were construction costs, Medicaid participation percentages, proposed sites, and charges. The matrix developed by Mr. Sharpe included additional factors which he felt would better address the quality of care to be provided, such as the size of facility, the size of the patient rooms, the amenities available to the patients and their families, the type and level of staffing, availability of special programs, and operating costs. By including a greater number of factors in the matrix, more information was considered in selecting the best applicant. As a result, the factors that traditionally had been considered by the Department were given relatively less weight. There was no notice to the applicants of this change in practice. Further, although all the information considered by Mr. Sharpe was taken from the applications and generally required to be in the application, the applicants reported the information differently, making a direct "apples-to-apples" comparison difficult. Mr. Sharpe's review of the applications spanned approximately five to eight days. Mr. Sharpe's staff in the information on the matrix from the applications, and, although Mr. Sharpe had personally reviewed all the applications, Mr. Sharpe did not personally check the information placed on matrix for accuracy. The Office of Community Medical Facilities' initial review covered a period of approximately six months. There was no evidence that the duties and responsibilities of the Office of Community Medical Facilities were not carried out in a thorough and appropriate manner. Ms. Dudek has more experience in reviewing CON applications than Mr. Sharpe, and she took into account, among other review criteria requirements, the type programs offered by the applicant and the quality of care the applicant had demonstrated and was capable of providing. Mr. Sharpe never talked to Ms. Dudek to find out the basis for her recommendation because he felt his responsibility was to do an independent review. Robert Sharpe reported his findings with regard to Lee County to Marta Hardy who apparently accepted Mr. Sharpe's recommendation on or about January 7, 1987, approving Careage's application for 60 beds and denying all others. On or about January 23, 1987, in the Florida Administrative Weekly, it was published that Careage was approved fob a 120-bed facility in Lee County. Actually HRS approved Careage for a 60-bed facility; the 120-bed figure in the Florida Administrative Weekly was erroneous. As a result of a new administration and Bob Griffin succeeding Ms. Hardy as Deputy Secretary in the Office of Health Planning, and due to his concerns about the unique manner in which these applications were reviewed and a decision made, another review of the applications for Lee County was conducted. The Office of Community Medical Facilities, the office originally responsible for reviewing the applications, was asked to do this review. This third review was conducted during the summer of 1987 by Bob May while this case was pending before the Division of Administrative Hearings. In this third review, a matrix was also used, but not the identical matrix previously used by Mr. Sharpe. Indeed, the Office of Community Medical Facilities was instructed not to look at what Mr. Sharpe's office had done. The review resulted in a decision that HRS would maintain its position of supporting partial approval of the Careage application for 60 beds. By letter dated September 4, 1987, the parties were formally notified of the HRS decision and a Correction Notice was published in the Florida Administrative Weekly indicating that the notice published in January, 1987, stating that Careage had received a CON for 120 beds, should have shown a partial approval of 60 beds, and a denial of 60 beds. HCR, Forum, Health Quest and Hillhaven timely contested initial approval of the Careage application and their own respective denials. Careage and HRS are the respondents. Hillhaven, prior to final hearing, dismissed its case contesting the Careage approval for 60 beds, and in this proceeding contends that Hillhaven should be awarded a certificate of need because there is a bed need in excess of 60 beds in Lee County. Careage did not timely contest the denial of the 120 beds requested in its original application. Health Care and Retirement Corporation of America HCR, through its wholly owned subsidiary, Maple Leaf of Lee County Health Care, Inc., proposes to construct a 120-bed community nursing home in Lee County, Florida. At the time its application was submitted, HCR had not selected a site on the proposed facility, but at hearing proposed to locate it in the Ft. Myers area. Currently, HCR owns and operates 92 nursing homes in 19 different states, including seven within the State of Florida. Its existing Florida facilities are Pasadena Manor Nursing Home (South Pasadena, Florida), Community Convalescent Center (Plant City Florida), Kensington Manor (Sarasota, Florida), Jacaranda Manor (St. Petersburg, Florida) Wakulla Manor (Crawfordville, Florida, Heartland of St. Petersburg (St. Petersburg, Florida, and Rosedale Manor (St. Petersburg, Florida). Each of these facilities received superior ratings on their latest licensure and certification survey with the exception of Heartland and Rosedale, which received a standard and conditional rating respectively. Significantly, the conditional rating assigned to the Rosedale facility occurred less than six months after that facility was acquired by HCR, and all deficiencies were corrected within 19 days of the survey. HCR's current proposal for a 120-bed facility will be a one-story structure containing 40,000 gross square feet, including 2,000 square feet for an ancillary adult day care center. It will have 58 semi-private rooms with half-bath (toilet and sink) and four private rooms with full bath (toilet, sink and shower) located within four patient wings, two nursing stations, two dining rooms, central bathing facilities, beauty- barber shop, quite lounge, physical therapy room, occupational therapy room, multi-purpose rooms, outdoor patio areas and the other standard functional elements required to meet licensure standards. In all, the proposed facility meets or exceeds state requirements for the construction of nursing homes. HCR proposes to dedicate one wing (14 semi-private and 1 private room) of its facility to the care of patients suffering from Alzheimer's Disease and related disorders. Alzheimer's Disease is a brain disorder that results in gradual memory loss and, as such loss progresses, a need for increased personal care. Historically, Alzheimer's patients have been mixed with other patients in nursing homes, often disrupting other patients and presenting problems of control for staff separate Alzheimer's care unit enables the nursing home to utilize special techniques to manage the patient without restraint or sedation, and provides the patient with a smaller, safer and specially designed area with specially trained staff to address the needs of such patients. However, absent fill-up, HCR does not propose to limit admission to its Alzheimer's unit solely to patients suffering from Alzheimer's disease and related disorders. HCR's Alzheimer's unit is reasonably designed, equipped and minimally staffed for its intended purpose. HCR also proposes to provide, as needed, subacute care at its facility. Due to the impacts of the federal DRG (diagnostically related group) system which encourages hospitals to discharge patients earlier, there has been an increased demand for subacute services in nursing homes. Included within the subacute services HCR proposes to offer are ventilator care, IV therapy, pulmonary aids, tube feeding, hyperalimentation, and percentage and long term rehabilitation. HCR currently provides a wide variety of such subacute services at its existing facilities, and it may reasonably be expected to continue such practice at the proposed facility. As an adjunct to the proposed nursing home, HCR proposes to operate an adult day care unit for 12 Alzheimer's Disease patients. Additionally, HCR will offer respite care within the nursing home when beds available. Adult care and respite care provide alternatives to institutional long-term care in nursing homes, aid in preventing premature rising home admissions, and promote cost containment. As initially reviewed by the Department, HCR's activity would be a single story building containing 40,000 gross square feet, including the day care area, with an estimated total project cost of $3,894,000. As proposed, the total project cost equates to $32,450 per bed, and as designed provides 127 net square feet of living space for private rooms and 166 square feet for semi- private rooms. Construction equipment costs were as follows: Construction costs $2,200,000; costs per square foot $55.00; construct cost per bed 17,417; equipment costs $420,000; and equipment cost per bed $3,500. HCR's estimate of project costs is reasonable. At hearing HCR updated its project costs to account for changes that arose during the delay between initial review and de novo hearing. As updated, the total project cost was $4,375,500, or $36,462 per bed. Construction equipment costs, as updated were as follows: construction costs $2,400,000; cost per square foot $60.00; construction cost per bed $19,000, equipment costs $420,000; and equipment cost per bed $3,500. HCR's updated estimate of cost is reasonable. Staffing at the proposed 120-bed facility is designed to accommodate the needs of the skilled and intermediate care patients, as well as the special needs of the Alzheimer's and subacute patients. HCR will provide 24-hour registered nurse coverage for subacute patients and a higher staffing level in the Alzheimer's unit. The nursing home will provide 3.59 hours per patient in the Alzheimer's unit and 2.73 nursing hours overall, based on the assumption that 50 percent of the Alzheimer's patients will wanderers and that 50 percent of all patients will require skilled care. Precise staffing for subacute patients will be determined by the nature of the subacute services needed. HCR's staffing levels, as originally proposed and as updated, meet or exceed state standards. The salary and benefit estimates provided by HCR in its original application reflect salary and benefit levels current at the time of application, and the salary and benefit projections provided by HCR at bearing reflect current (1987) salaries and benefits inflated to the date of opening. Both estimates are reasonable. HCR's projection of utilization by class of pay as initially proposed was as follows: Private pay 51 percent, Medicaid 46 percent, and Medicare 3 percent. Due to its experience over the intervening 17 months since submittal of its application, HCR updated its assessment of utilization as follows: Private pay 50 percent, Medicaid 46 percent, and Medicare 4 percent. The current Lee County Medicaid experience level is 46 percent, and HCR provides an average 71 percent Medicaid occupancy in its Florida facilities. HCR's projections for payor mix are reasonable. HCR's initial application contained estimates of expenses and revenues current as of the date of application (July 1986) but failed to include an inflation factor to accommodate anticipated increases in expenses and revenues. Initially, T. projected its per diem room charges to be $60 to $85. At hearing, HCR projected its per diem room charges in the year opening (1990) to be $90 for a private room, $75 for a semiprivate room, $76.00 for Medicare patients, and $72 for Medicaid patients. The private, semi-private and Medicare charges were determined by inflating current (1987) Lee County charges forward to the year of opening. The Medicaid charges were based on a calculation of the Medicaid reimbursement formula. These charges, when multiplied by patient days, are a reasonable estimate of the projected revenues of the facility. HCR's estimate of expenses in its initial application was based on its current experience. Intervening events have lent new insight to its evaluation of expenses, as have intervening inflationary factors. While HCR's estimate of expenses and revenues was reasonable in its initial application, its current estimates comport with the reality of a 1990 opening and are reasonable. HCR has the available resources, including management personnel and funds for capital and operating expenditures, for project accomplishment and operation, and will be able to recruit any other personnel necessary to staff its facility. Since HCR does not propose to initially limit admission to its Alzheimer's unit solely to patients suffering from Alzheimer's disease and related disorders, its pro formas are premised on reasonable assumptions, and it has demonstrated the financial feasibility project in both the short term and long term. The proof demonstrates that HCR provides and Bill continue to provide quality care. HCR's corporate standards and guidelines regulate such areas as patient rights, staff development and orientation, physician and nurse services, pharmacy services and medication administration, social services, and infection control. HCR's manager of quality assurance, house professional services consultants, and quality assurance consultants regularly visit each HCR nursing home to implement the quality assurance standards and guidelines. Each HRC nursing home provides a staff development director who is responsible for the orientation of new employees, training new employees, and continuing training for all employees. Forum Group Inc. Forum is a publicly held health services company which owns, develops and operates retirement living centers and nursing homes on a national basis. Currently Forum operates 22 Lang facilities and an additional 11 retirement living centers with attached nursing facilities, including one nursing facility in Florida. Its Florida facility holds a standard rating. Other facilities owned by Forum in Texas, Kentucky and Illinois do, however, hold superior ratings. Pertinent to this case, Forum proposes to develop a retirement living center in Lee County that would consist of its proposed 60-bed skilled and intermediate care nursing home, an adult congregate living facility, and apartments or Independent living. Each of the three components which comprise Forum's retirement living center are physically connected and share some operational functions, such as a central kitchen, laundry, administrative area and heating plant. Such design provides for an efficient operation, as well as an economical distribution costs facility wide. The nursing facility proposed by Forum will be a single story building of wood frame and brick veneer construction containing 27,000 gross square feet. It will include 20 semi- private rooms with half bath, 16 private rooms with half bath, 3 private rooms with full bath, and one isolation room with full bath. Also included are a beauty-barber shop, quite lounge, physical therapy room, occupational therapy room, and exam-treatment room. But for the length of the corridors in the patient wings, discussed infra, the proposed facility meets or exceeds state requirements for the construction of nursing homes. Forum's proposal, as initially reviewed by the Department, would have a total project cost of $2,314,800. This equates to $38,580 per bed, and as designed provides 150 net square feet of living space for private rooms and 228 net square feet for semi-private rooms. Construction equipment costs were as follows: Construction costs $1,377,000; cost per square foot $51.00; construction cost per bed $22,950; equipment costs $200,000; and equipment costs per bed $3,333. Forum's estimate of project cost is reasonable. Forum provided a single-line drawing indicating the general arrangement of spaces for its proposed facility. As proposed, the facility would consist of two patient wings, and a central nurse's station. The corridor lengths in the patient wings exceed state standards by 40 feet. They could, however, be modified to conform to State standards without significantly affecting the cost of construction. The project would have energy conservation features such as heavy duty roof and side insulation, double-glazed windows, and high efficiency heating and air conditioning equipment. The forum facility will offer skilled and intermediate care, and subacute care, including IV therapy, ventilator care, hyperalimentation, pulmonary aids, and short and long term rehabilitation. Forum would contract out for physical therapy, speech therapy, pharmacy consultation and a registered dietician. If needed, Forum would offer respite care when beds are available. The proposed staffing levels and salaries proposed by Forum in its application are reasonable and meet or exceed state standards. Forum has a staff training program, with pre-service and in-service training, and utilizes a prescreening procedure to assure it hires competent staff. Twenty-four hour coverage by registered nurses will be provided, and a staffing ratio of 2.9 will be maintained. The staffing level at the proposed facility is consistent with that experienced at Forum's existing Florida Facility. Forum provides, and will continue to provide, quality care. Forum's application projected its utilization by class of pay as follows: private pay 58.47 percent, Medicaid 37.16 percent, and Medicare 4.37 percent. Currently, Forum experiences a 48 percent Medicaid occupancy rate system-wide, although it only has 2 of 35 beds dedicated to Medicaid care in its present Florida facility. Forum estimated its revenues based on patient charges ranging from $50.64 per day for Medicaid/semi-private room to $75.00 per day for SNF/private pay/private room. Based on such revenues, its pro forma, utilizing a conservative 86.25 percent occupancy rate at the end of the second year of operation, demonstrated the short term and long term financial feasibility of the project as initially reviewed by the Department notwithstanding the fact that it had underestimated its Medicaid and Medicare reimbursement rates. At hearing, Forum sought to demonstrate that its project was currently feasible by offering proof that intervening events had not significantly impacted the financial feasibility of its project. To this end, Forum offered proof that the contingencies and inflation factors it had built into the construction of its initial proposal would substantially offset any increased costs or expenses of construction. Additionally, Forum sought to update its proposal at hearing by offering testimony that included an increase in the administrator's salary from $27,000 to $39,000, a decrease in interest in year one to $187,803, an increase in interest in year two to $250,790, and an increase in revenues based on patient charges ranging from $69.19 per day for Medicaid/semi private room to $90.00 per day for SNF/private pay/private room. Some of the applicants objected to Forum's proof directed at the current financial feasibility of its project because it had not previously provided them with a written update of its application as ordered by the Hearing Officer. The applicants' objection was well founded. Further, the proof was not persuasive that any contingencies and inflation factors it had built into its initial proposal would substantially offset any increased costs or expenses of construction, nor that salaries, benefits and other expenses that would be currently experienced were appropriately considered in addressing the present financial feasibility of Forum's project. While Forum has the available resources, including management personnel and funds for initial capital and operating expenditures, for project accomplishments and operation, and will be able to recruit any other personnel necessary to staff its facility, it has failed to demonstrate that its proposal, as updated, is financially feasible in the long term. Health Quest Corporation Health Quest is a privately held corporation which owns, develops and operates health care facilities and retirement centers on a national basis. Health Quest has been in business for approximately 20 years, and currently operates 11 long-term care facilities and three retirement centers in Indiana, Illinois, and Florida. Its existing Florida facilities are located in Jacksonville, Boca Raton, and Sarasota. It also has facilities under construction in Winter Park and Sunrise, Florida. Health Quest also held a number of other certificates of need to construct nursing facilities in Florida. Recently, however, it decided to transfer or sell 3-4 of those certificates because its initial decision to develop nine new projects simultaneously would have, in its opinion, strained its management staff and commitment to high quality standards. HCR is, however, currently proceeding with several projects in Florida, and anticipates that the proposed Lee County facility will be brought on line thereafter. Pertinent to this case, Health Quest proposes to develop a retirement center in Lee County that would consist of a 60-bed skilled and intermediate care nursing home, and 124 assisted living studio apartments (an ACLF). 4/ The two components which comprise Health Quest's retirement center are physically connected and share some operational functions such as a common kitchen, laundry, therapy areas, maintenance areas, and administrative areas. Such design provides for an efficient operation, as well as an economical distribution of costs facility wide. In addition to providing an economical distribution of costs, the two components of the retirement center are mutually supportive. The nursing care unit supports the ACLF by making sure that health care services are available to the assisted living people. The ACLF supports the nursing unit as a source of referral and as an alternative to nursing home placement. The nursing facility proposed by Health Quest will be a single story building of masonry and concrete construction. It will include 6 private rooms and 27 semi-private rooms with half-bath attached, central nurse's station, central bathing facilities, beauty-barber shop, quite lounge, central dining area, physical and occupational therapy room and outdoor patio The center, itself, will provide patios, walkways and other outdoor features to render the facility pleasant and attractive, and will provide multi-purpose areas to be used for religious services and other activities, an ice cream parlor and gift shop. As proposed, the nursing home meets or exceeds state standards. As initially reviewed by the Department, Health Quest's proposed facility contained 25,269 gross square feet, with an estimated total project cost of $2,244,505. As proposed, the total project cost equates to $37,408 per bed, and as designed provides 240 net square feet of living space for both private and semi-private rooms. Construction equipment costs were as follows: Construction costs $1,470,333; cost per square foot $58.19; construction cost per bed $24,506; equipment costs $298,200; and equipment cost per bed $4,970. While the majority of Health Quest's costs are reasonable, its equipment costs are not. These costs are substantially the same as those projected in its original application for a 120-bed facility, which at an equipment cost of $300,000 derived an equipment cost per bed of $2,500. Why the same cost should prevail at this 60-bed facility was not explained by Health Quest, and its equipment cost per bed of $4,970 was not shown to be reasonable. As with most applicants, Health Quest updated its project costs at hearing to account for the changes which were occasioned by the delay between initial review and de novo hearing. As updated, the estimated project cost is $2,290.331, $38,172 per bed. Construction equipment costs were as follows: Construction costs $1,507,043; cost per square foot $59.64; construction cost per bed $25,117; equipment costs $302,700; and equipment costs per bed $5,045. Again, while the majority of Health Quest's costs are reasonable its equipment costs are, for the reasons heretofore expressed, not shown to be reasonable. The Health Quest facility will offer skilled and intermediate nursing care, and subacute care, including IV therapy, chemotherapy, TPN therapy and tracheostomy care. Also to be offered are respite care as beds are available and, within the complex, adult day care. Health Quest will maintain a nursing staffing ratio of approximately 3.25 hours per patient day for skilled care and 2.5 for intermediate care. As originally reviewed by the Department, Health Quest's staffing levels and expenses were reasonable. At hearing, Health Quest increased its staffing levels to account for an increased demand in labor intensive care, and increased its staffing expenses to account for the intervening changes in the market place. As updated, Health Quest's staffing levels and expenses are reasonable. Health Quest's projection of utilization by class of pay in the application reviewed by the Department was as follows: private pay 51.6 percent, Medicaid 45 percent, and Medicare 3.4 percent. Health Quest's utilization projection, as updated at hearing, was as follows: private pay 50.9 percent, Medicaid 45 percent, and Medicare 4.1 percent. TAB Health Quest currently serves 30 percent Medicaid patients at its Jacksonville facility, 10 percent Medicaid patients at its Boca Raton facility, and no Medicaid patients at its Sarasota facility. It has, however, committed to serve 40 percent and 48 percent Medicaid patients at its Sunrise and Winter Park facilities, respectively. Health Quest's projections of payor are reasonable. Initially, Health Quest projected its per diem room charges to range from $52 for skilled and intermediate care Medicare patients to $57.25 for skilled care-private and Medicare patients. It did not, however, draw any distinction between private and semi-private rooms. At hearing, Health Quest projected its per diem room charges as follows: $90 for SNF/single/private pay; $73 for SNF/double/private pay; $73 for SNF/double/Medicare; $68 for SF/double Medicaid; $68 for ICF/single/private pay; $70.75 for ICF/double/private pay; and $68 for ICF/double/Medicaid. Health Quest's fill-up and occupancy projections, as well as its projections of revenue and expenses, are reasonable. They were reasonable when initially reviewed by the Department, and as updated. During the course of these proceedings, a serious question was raised as to whether Health Quest had demonstrated that it had the available resources, including management personnel and funds for capital and operating expenditures, for project accomplishment and operation, or that it was committed to the subject project. Within the past three years, Health Quest has sold three of its approved CONS and is considering the sale a fourth due to its inability to handle that number of projects, and the adverse impact it would have on its ability to deliver quality care. Notwithstanding its inability to proceed with approved projects, Health Quest proceeded to hearing in October 1987 and December 1987 for nursing home CONs in Hillsborough County and Lee County (the subject application), and also had nine such applications pending in the January 1987 batching cycle and eight such applications in the October 1987 batching cycle. Health Quest's actions are not logical, nor supportive of the conclusion that it is committed to this project or that it possesses available resources for project accomplishment. Under the circumstances, Health Quest has failed to demonstrate that it has the available resources, including management personnel and funds for capital and operating expenditures, for project accomplishment and operation. Health Quest's facilities in Jacksonville and Boca Raton currently hold superior ratings from the Department. A superior rating includes consideration of staffing ratios, staff training, the physical environment, physical and restorative therapies, social services, and other professional services. Those facilities are monitored, as would the subject facility, by Health Quest for quality care through a system of quarterly peer review, and provide extensive staff education programs that include orientation training for new staff and on-going education for regular staff. Health Quest has demonstrated that it has provided quality care. However, in light of the strain its current activities have placed on its resources, it is found that Health Quest has failed to demonstrate that it could provide quality care at the proposed facility were its application approved. Hillhaven, Inc. Hillhaven is a wholly owned subsidiary of the Hillhaven Corporation, which is a subsidiary of National Medical Enterprises. The Hillhaven Corporation has been business for almost 30 years, and is currently responsible for the operation of approximately 437 nursing homes and retirement centers nationally, including 15 nursing homes which it owns or operates in the State of Florida. Hillhaven proposes to develop a new 120-bed skilled and intermediate care community nursing home in Fort Myers, Lee County, consisting of 38,323 square feet. It will include 14 private rooms and 53 semi-private rooms, a full bath attached to each room (shower, toilet and sink), central tub rooms, beauty- barber shop, quite lounge, chapel, physical therapy room, occupational therapy room, and outdoor patio areas. In all, Hillhaven's proposed facility meets or exceeds state requirements for the construction of nursing homes. As initially reviewed by the Department, Health Quest's proposed facility would be a single-story building containing 38,323 gross square feet, with an estimated total project cost of $3,544,444. As proposed, the total project cost equates to $29,537 per bed, and as designed provides 217 net square feet of living space for both private and semi-private rooms. Construction equipment costs were as follows; construction costs $2,146,000; cost per square foot $56.00; construction cost per bed $17,884; equipment costs $442,005; and equipment cost per bed $3,683.38. Hillhaven's project costs are reasonable. As with the other applicants, Hillhaven update its project costs at hearing to account for the changes which were occasioned by the delay between initial review and de novo hearing, certain oversights in its initial submission, and its decision to proceed with type 4 construction as opposed to type 5 construction as originally proposed. As updated, the estimated project cost is $4,089,639, or $34,155.33 per bed. Construction equipment costs, as updated, were as follows: construction costs $2,446,088; cost per square foot $63.82; construction cost per bed $20,384; equipment costs $521,200; and equipment costs per bed $4,343.33. By far, the biggest factor in the increased construction costs was Hillhaven's decision to proceed with type 4 construction as opposed to type 5 construction. Either type of construction would, however, meet or exceed state standards, and Hillhaven's estimates of construction and equipment costs are reasonable. The Hillhaven facility will offer skilled and intermediate care, occupational therapy, speech therapy, physical therapy, recreational services, restorative nursing services, and social services. Hillhaven does not discriminate on admission, and would admit Alzheimer's and subacute patients as presented. Were sufficient demand experienced, Hillhaven has the ability to provide and would develop a full Alzheimer's unit, and provide day care and respite care. Currently, Hillhaven operates 36 Alzheimer's units at its facilities nation wide, but has experienced no demand for such a special unit or other special care at its existent Lee County facility. As originally reviewed by the Department, Hillhaven's staffing levels an expenses were reasonable. At hearing, Hillhaven increased its staffing levels to account for staff inadvertently omitted from its initial application, and increased its staffing expenses to account or intervening changes in the market place. As updated, Hillhaven's staffing level is 2.5, and its staffing levels and expenses are reasonable. Hillhaven's projected utilization by class of pay as originally reviewed by the Department was as follows: private pay 30 percent, Medicaid 60 percent, and Medicare 10 percent. As updated at hearing, Hillhaven's utilization projection was as follows: private pay 44 percent, Medicaid 53 percent, and Medicare 3 percent. Currently, Hillhaven provides, on average, 53 percent Medicaid care at its facilities in Florida. Hillhaven's estimate of payor mix was reasonable and, in light of intervening changes in circumstance, was reasonable as updated. Hillhaven's patient charges for its second year of operation as originally reviewed by the Department ranged from $58.60 to $62.00 per day. As updated, Hillhaven's patient charges ranged from $52.13 to $73.50 per day. Hillhaven's estimated charges were achievable when initially proposed and as updated, and are reasonable. Hillhaven's fill-up and occupancy projections, as well as its projections of revenues and expenses, are reasonable. They were reasonable when initially reviewed by the Department, and comport, as updated, with the current experience in Lee County. Hillhaven has the available resources, including management personnel and funds for capital and operating expenditures, for project accomplishment and operation, and will be able to recruit any other necessary personnel to staff its facility. Its pro forma estimates are premised on reasonable assumptions, and Hillhaven has demonstrated the short term and long term financial feasibility of its project. Currently, Hillhaven owns or operates 15 facilities in the State of Florida. Of these 15 facilities, two have opened within the past year and are not eligible for ratings. Nine of the 13 eligible facilities are operating with superior licenses. Of the remaining four facilities, two have a standard license and two have a conditional license. The two facilities with conditional ratings have both resolved their deficiencies. Hillhaven has provided and will continue to provide quality care. It ensures that quality care will be maintained within its facilities by drawing upon the professional resources four regional offices comprised of registered nurses, quality assurance monitors, regional dietitians, maintenance supervisors, employee relations specialists, and other administrative support personnel. Regional consultants visit company facilities monthly to plan, organize and monitor operations, and to conduct in-service training workshops. Overall, Hillhaven provides each facility with an in-depth quality assurance program. Gene Lynn d/b/a Careage Southwest Healthcare Center Gene Lynn (Careage) is the president and 100 percent owner of Careage Corporation. Since 1962, Careage has developed approximately 150 nursing homes and retirement centers, as well as 100 medically related facilities, in 22 states and the Virgin Islands. Until December 1986 it did not, however, own or operate any facilities. Currently, Careage operates four nursing homes in the United States (one in the State of Washington, two in the State of California, and one in the State of Arizona) , but none in Florida. The home office of Careage is located in Bellevue, Washington. Careage proposed to develop a new 120-bed skilled and intermediate care nursing home in Lee County with specialty units for subacute and Alzheimer's care, consisting of 45,500 square feet. It would include a patient care unit consisting of 2 isolation rooms and 7 private rooms with full bath and 45 semiprivate rooms with half-bath, an Alzheimer's unit consisting of 1 private room with full bath and 10 semiprivate rooms with half bath, central dining area, beauty-barber shop, quiet lounge, chapel, physical therapy room, occupational therapy room, outdoor patio areas, and exam-treatment room. As proposed, the nursing home meets or exceeds state standards. As initially reviewed by the Department, Careage's proposed facility was a single-story building containing 45,500 gross square feet, with an estimated total project cost of $4,150,000. As proposed, the total project cost equates to 34,583 per bed, and as designed provides 184-227 net square feet of living space for isolation/private rooms, and 227-273 net square feet of living space or semi-private rooms. Construction equipment costs were as follows: construction costs $2,583,125; cost per square foot $56.77; construction cost per bed $21,526; equipment costs $420,000; and equipment cost per bed $3,500. Careage's methods of construction, as well as its construction and equipment costs, are reasonable. The Careage facility would offer skilled and intermediate care, occupational therapy, physical therapy, recreational services and social services. Additionally, the proposal includes a special 21-bed unit dedicated solely to the treatment of Alzheimer's disease patients, and a dedicated 10-bed unit for subacute care which will accommodate technology dependent children care. Among the subacute services to be offered are hyperalimentation, IV therapy, ventilators, heparin flush, and infusion pumps for administration of fluids. Careage will offer respite care as beds are available, and will offer day care in a separate facility. Careage's projected utilization by class of pay as originally reviewed by the Department was as follows: private pay 49 percent, Medicaid 40 percent, Medicare 3 percent, subacute (private) 6 percent, and VA 2 percent. Careage's patients charges for its facility were projected as follows: private and VA (room rate only) $63.86, Medicaid (all inclusive rate) $59.23, Medicaid (all inclusive rate) $108.15, and private (other) /subacute (room rate only) $128.75. Careage's fill-up and occupancy projections as well as its projections of revenues and expenses, for its 120-bed facility were not shown to be reasonable. First, in light of the fact that there was no quantifiable demand for a dedicated Alzheimer's unit and subacute care unit, as discussed infra at paragraphs 126-129, no reliable calculation of fill-up and occupancy rates or revenues and expenses could be derived that was, as the Careage application is, dependent on such revenue stream. Second, the Careage pro forma was predicated on average rates experienced in Lee County. Since Careage proposes heavier nursing care than that currently experienced in Lee County, its estimates of patient charges are not credible. At hearing, Careage updated its 120-bed application to account for inflationary factors that had affected the project since it was first reviewed, and to correct two staffing errors. These updates did not substantially change the project. Careage has the available resources, including management personnel and funds for capital and operating expenditures, for project accomplishment and operation, and will be able to recruit any other necessary personnel to staff its facility. Its pro forma estimates were not, however, premised on reasonable assumptions, and Careage has failed to demonstrate the short term and long term financial feasibility of its 120-bed project. Following the Department's initial review of the applications in this batching cycle, it proposed to award a certificate of need to Careage for a 60- bed facility, premised on its conclusion that there was insufficient numeric need to justify an award of beds exceeding that number, notwithstanding the fact that the application of Careage was for 120 beds and did not request or propose a 60-bed facility. Notably, all financial, staffing, construction, equipment and other projections described in the Careage application were based on a 120- bed facility, and no information was provided regarding a 60- bed facility. Also notable is the fact that the other applicants were not accorded equal consideration. Not surprisingly, the proposed award of a CON for 60-beds to Careage was timely challenged, but Careage did not protest the Department's denial of its application for 120 beds but appeared as a respondent to defend the Department's decision to award it 60 beds. At hearing, Careage offered proof of the reasonableness of its 120- bed proposal over the objection of the other applicants. /5 Careage contends that its proposed 60-bed facility is a scaled down version of its 120-bed proposal Careage proposes to offer the same services in its 60-bed facility as it proposed in its 120-bed facility, including the 21-bed Alzheimer's unit and 10-bed subacute care unit. Its proposed 60- bed facility is not, however, an identifiable portion of its initial project. As proposed, the 60-bed facility would contain 26,900 gross square feet, and meet or exceed state standards. It would include a patient care unit consisting of 1 isolation room and 4 private rooms with full bath, 17 semi- private rooms with half-bath, an Alzheimer's unit consisting of 1 private room with full bath and 10 semi-private rooms with half-bath, together with the same amenities offered by the 120-bed facility, but on a reduced scale. As proposed, the total project cost for the 60-bed facility is $2,475,000, which equates to $41,250 per bed. As designed, the facility would provide the same net square footage of living space for private and semi-private rooms as the 120-bed facility. Construction equipment costs would be as follows: construction costs $1,431,750; cost per square foot $53.22; construction cost per bed $23,863; equipment costs $210,000; and equipment cost per bed $3,500. Careage's methods of construction, as well as its construction and equipments costs, are reasonable. Careage's projected utilization by class of pay in its 60-bed facility was as follows: private pay 47 percent, Medicaid 40 percent, Medicare 5 percent, subacute (private) 6 percent, and VA 2 percent. Careage's patient charges for its 60-bed facility were projected as follows: private and VA (room rate only) $66.00, Medicaid (all Inclusive rate) $63.50, Medicare (all inclusive rate) $120.00, private (other)/subacute (room rate only) $130.00. Careage's fill-up and occupancy projections, its projections of revenue and expenses, and its pro forma estimates for its 60-bed facility suffer the same deficiencies as those for its proposed 120-bed facility. Under the circumstances, Careage has failed to demonstrate the short term and long term financial feasibility of its 60-bed facility. While Careage has only owned and operated nursing homes for a short time, the proof demonstrates that it has and will continue to provide quality care for its residents. The Alzheimer's unit and subacute care units are reasonably designed, equipped and staffed for their intended functions. Staffing ratios in the subacute unit will be 6.0, and in the other areas of the facility 3.0. Careage currently utilizes a quality assurance program at each facility which includes a utilization review committee, safety committee, infection control committee, and pharmaceutical committee. Each facility also has a resident advisory council, community advisory council, and employee advisory council. Presently, Careage is developing a company level quality assurance program, and has initiated announced and unannounced site visits by a quality assurance expert to evaluate resident care, operations, maintenance and physical environment. The Department of Health and Rehabilitative Services The opinions expressed by the witnesses offered by the Department were premised on information available to them while these applications underwent "preliminary" review. The information available to them at that time, and represented by the State Agency Action Report (SAAR), was incomplete and inaccurate in many respects, including the services to be provided by some of the applicants and the approved bed inventory and occupancy rates utilized in the need methodology. These witnesses were not made privy to, and expressed no opinions, regarding the relative merits of the applications in light of the facts developed at hearing. Throughout the hearing, counsel for the Department objected to evidence from any applicant regarding "updates" (changes) to their applications as they were deemed complete by the Department prior to its initial review. It was the position of the Department's counsel, but otherwise unexplicated, that the only appropriate evidence of changed conditions after the date the application was deemed complete were those changes which relate to or result from extrinsic circumstances beyond the control of the applicant, such as inflation and other current circumstances external to the application. The majority of the "updated" material offered by the applicants at hearing did result from the effects of inflation, the passage of time between the application preparation and the dates of final hearing, changes in the market place regarding nursing salaries, changes in the Medicaid and Medicare reimbursement system and typographical errors in the application. Some changes in design were offered as a result of the applicant's experience with other construction projects and in order to comply with licensing regulations. There were also some changes which resulted from better information having been secured through more current market surveys. None of the applicants attempted to change their planning horizon, the number of beds proposed, the proposed location of the facility or the services to be offered except Careage. The Department has established by rule the methodology whereby the need for community nursing home beds in a service district shall be determined. Rule 10-5.011(1)(k)(2), Florida Administrative Code; formerly, Rule 10- 5.11(21)(b) Florida Administrative Code. The first step in calculating need pursuant to the rule methodology is to establish a "planning horizon." Subparagraph 2 of the rule provides: Need Methodology... The Department will determine if there is a projected need for new or additional beds 3 years into the future according to the methodology specified under subparagraphs a. through i. The Department interprets subparagraph 2, and the applicants concur, as establishing a "planning horizon" in certificate of need proceedings calculated from the filing deadline for applications established by Department rule. This interpretation is consistent with the numeric methodology prescribed by subparagraph 2, and with the decision in Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 483 So.2d 700 (Fla. 1st DCA 1986). Applying the Department's interpretation to the facts of this case establishes a "planning horizon" of July 1989. Pertinent to this case, subparagraphs 2a-d provide the methodology for calculating gross bed need for the district/subdistrict in the horizon year. In this case, the applicable district is District 8, and the applicable subdistrict is Lee County. The first step in the calculation of gross need for the horizon year is to derive "BA", the estimated bed rate for the population age group 65-74 in the district. This rate is defined by subparagraph 2b as follows: BA LB/ (POPC + (6 x POPD) Where: LB is the number of licensed community nursing home beds in the relevant district. POPC is the current population age 65-74 years. POPD is the current population age 75 years and over. The parties concur that the district licensed bed figure (LB), as well as the subdistrict licensed bed figure (LBD) is calculated based on the number of community nursing home beds as of June 1, 1986. The Department's Semi-Annual Nursing Home Census Report and Bed Need Allocation prepared for the July 1986 review cycle (July 1989 planning horizon) listed 4,193 licensed community nursing home beds in District 8 and 996 in Lee County. However, that count taken on May 1, 1986, did not include 120 new beds which were licensed in Charlotte County on May 8, 1986. The count also excluded 287 beds at four other facilities in the district, including 60 beds at Calusa Harbor in Lee County, because they were listed as sheltered beds according to Department records at that time. After passage of Section 651.118(8), Florida Statutes, the Department surveyed the facilities and found that the beds at these four facilities were operated as community beds rather than sheltered beds. Under the circumstances, the proof demonstrates that as of June 1, 1986, there were 4,600 licensed community nursing home beds in district 8 (LB) and 1,056 in Lee County (LBD). The formula mandated by the rule methodology or calculating BA requires that the "current population" for the two age groups be utilized. The rule does not, however, prescribe the date on which the "current population" is to be derived. Some of the applicants contend that the current population" for POPC and POPD should correspond to the period for which the average occupancy rate (OR) is calculated or the July batching cycle, OR based upon the occupancy rates of licensed facilities for the months of October through March preceding that cycle. Under this theory, January 1, 1986, as the midpoint of that period, is the appropriate date to calculate "current population" to derive PCPC and POPD. The Department contends that "current population" for POPC and POPD should be calculated as of July 1986, the filing deadline for applications in this review cycle. The Department's position is, however, contrary to its past and current practice. The need reports issued by the Department between December 1984 and December 1986, routinely used a three and one- half year spread between the base population period and the horizon date for "current population." In the January 1987 batching cycle, which cycle immediately followed the cycle at issue in this case, the Department utilized a three and one-half spread between the base population period and the horizon date for "current population" when it awarded beds in that cycle. The Department offered no explanation of why, in this case, it proposed to deviate from its past and current practice. Under the circumstances, January 1, 1986, is the appropriate date on which the "current population" is to be calculated when deriving POPC and POPD. The parties are also in disagreement as to whether population estimates developed after the application deadline can used to establish the current population. Rule 10- 5.011(k)2h, Florida Administrative Code, mandates that population projections shall be based upon the official estimates and projections adopted by the Executive Office of the Governor, but does not limit such proof to any particular estimate. The Department advocates the use of population estimates existent at the application deadline. Accordingly, it would apply the official estimates and projections adopted by the Executive Office of the Governor as of July 1, 1986. Other parties would apply the more recent estimates adopted by the Office of the Governor as of July 1, 1987. In this case, the use of either estimate would have no significant effect on the result reached under the rule methodology; however, since all population estimates and projections are only approximations rather than actual counts, it would be more reasonable from a health planning perspective to use the latest estimates of the 1987 population than the estimates available at the time of application. In this case, this means using July 1, 1987, estimates of January 1986 populations. These estimates are still "current" as of January 1986, since It is still the January 1986 population that is to be measured, and more reliable from a health planning perspective than the prior projection. In the same manner, July 1, 1987, estimates of horizon year 1989 populations (PCPA and POP), infra, would also be used rather than July 1, 1986, estimates of that population. Accordingly, Forum's calculation POPC (128,871), POPD (77,194), POPA (149,645), and POPB (95,748) is appropriate. (Forum Exhibit 10, Appendix A) Application of the methodology prescribed by subparagraph 26 to the facts of this case produces the following calculation: BA 4,600/(128,871 + (6 x 77,194) BA 4,600/(128,871 + 463,164) BA 4,600/592,035 BA .0077698 The second step in the calculation of gross need for the horizon year is to derive "BB", the estimated bed rate for the population age group 75 and over in the district. This methodology is defined by subparagraph 2c, and calculated in this case as follows: BB 6 x BA BB 6 x .0077698 BB .0466188 The third step in the calculation of gross need for the horizon year is to derive "A", the district's age adjusted number of community nursing homes beds" at the horizon year. This methodology is defined by subparagraph 2a as follows: A (POPA x BA) + (POPB x BB) Where: POPA is the population age 65-74 years in the relevant department district projected three years into the future. POPR is the population age 75 years and older in the relevant departmental district projected three years into the future. Application of the methodology prescribed by subparagraph 2a to the facts of this case produces the following calculation: A (149,645 x .0077698) + (95,748 x .0466188) A 1,162.7117 + 4,422.4086 A 5,585.12 The final step in the calculation of gross need in the horizon year is to derive "SA", the preliminary subdistrict allocation of community nursing home beds;" gross need in the case. 7/ This calculation is defined by subparagraphs 2d as follows: SA A x (LBD/LB) x (OR/.90) Where: LBD is the number of licensed community nursing home beds in the relevant subdistrict. OR is the average 6 month occupancy rate for all licensed community nursing homes within the subdistrict of the relevant district. Occupancy rates established prior to the first batching cycle shall be based upon nursing home patient days for the months of July 1 through December 31; occupancy rates established prior to the second batching cycle shall be based upon nursing home patient days for the months of January 1 through June 30. The batching cycle in which these applications were filed, however, occurred before the Department amended its rule to include the fixed need pool concept contemplated by subparagraph 2d. Accordingly, the parties concur that the six month period on which the average occupancy rate is calculated is not as set forth in subparagraph 2d of the current rule, but, rather, defined by former rule 1C--5. 11(21)(b)4 as follows: OR is the average occupancy rate for all licensed community nursing homes within the subdistrict of the relevant district. Review of applications submitted for the July batching cycle shall be based upon occupancy data for the months of October through March preceding that cycle... In calculating the occupancy rate (OR) for the licensed community nursing homes in the subdistrict (Lee County) the Department derived a figure of 91.91. The Department arrived at this figure based on the first day of the month patient census of each facility considered to have community beds (LBD=1,056), which included the 60 beds at Shell Point Nursing Pavilion; assumed that such census was maintained throughout the entire month; and then divided such patient days by the actual number of beds available. The Department's methodology is an accepted health planning technique, and comports with its previous practice. Some of the parties disagree with the technique utilized by the Department to calculate OR, and advocate the use of actual patient day occupancy to derive OR. This technique differs from the "first of the month" technique by utilizing the actual number of patient days experienced by the facility, as opposed to assuming a constant census based on first of the month data. This alternative methodology is, likewise, an accepted health planning technique, and if proper assumptions are utilized will yield a more meaningful result than the Department's methodology. In this case, the proponents of the "actual patient day occupancy" methodology, erroneously assumed that 160 beds at Shell Point Nursing Pavilion were community nursing homes beds, as opposed to 60 beds; and, based on an erroneous LBD of 1,156, derived a subdistrict occupancy rate of 92.97. Under such circumstances, these proponents calculations are not reliable, and the subdistrict occupancy rate derived by the Department is accepted. Applying the facts of this case to the methodology prescribed by subparagraph 2d produces the following gross need calculation for the subdistrict: 5A 5,585.12 x (1,056/4,600) x (.9191/.9) SA 5,585.12 x .2295652 x 1.0212222 SA 1309.36 The final step in the numeric need methodology is to derive net need from gross need. According to subparagraph 2i, this need is calculated as follows: The net bed allocation for a subdistrict, which is the number of beds available for Certificate of Need approval, is determined by subtracting the total number of licensed and 90 percent of the approved beds within the relevant department subdistrict from the bed allocation determined under subparagraphs 2.a. through f. unless the subdistrict's average occupancy rate for the most recent six months is less than 80 percent, in which case the net bed allocation is zero. The number of approved and licensed nursing home beds for the second batching cycle in 1987 shall be based on the number of approved and licensed beds as of August 1, 1987, in subsequent nursing home batching cycles, the number of licensed and approved beds to be used in establishing net need for a particular batching cycle shall be determined as of the agency's initial decision for the immediately preceding nursing home batching cycle. While the rule requires that net need be calculated by subtracting "the total number of licensed and 90 percent of the approved beds" In the subdistrict from the cross need previously calculated, it is silent as to the date that inventory should be calculated when, as here, the batching cycle at issue predates its enactment. In the face of this dilemma, the parties rely on the provisions of former rule 10-5.11(21)(b) , Florida Administrative Code, which was existent when their applications were filed to resolve their dispute. Under the circumstances, reference to former rule 10-5.11(21)(b), is appropriate. Former rule 10-5.11(21)(b)9 provides: The net bed allocation for a subdistrict, which is the number of beds available, is determined by subtracting the total number of licensed and 90 percent of the approved beds within the relevant departmental subdistrict from the bed allocation determined under subaragraphs 1 through 9 (sic 8).... (Emphasis added) While the former rule requires that net need be calculated by subtracting "the total number of licensed and 90 percent of the approved beds" in the subdistrict from the gross need calculated under subparagraphs (b)1-8, it is silent as to the date that inventory should be calculated. The Department asserts that the number of licensed beds should be calculated as of June 1, 1986 (the date established by subparagraph (b)7 of the former rule as the data base for calculating LB and LBD, and the number of approved beds as of December 18, 1986 (the date the Department's supervisory consultant signed the state agency action report). The other parties would likewise calculate licensed beds as of June 1, 1986, but would also calculate approved beds as of that date. The Department offered no reasonable evidentiary basis for its interpretation of the date at which the total number of licensed and approved beds are to be calculated under subparagraph (b)9 of the former rule. As discussed below, the dates used by the Department and the other parties for purposes of calculating net need were facially unreasonable. The Inventory of licensed and approved beds under subparagraph (b)9 of the former rule, as well as subparagraph 2i of the current rule, are inextricably linked. As approved beds are licensed, the approved bed inventory decreases and the licensed bed inventory increases. The Department's interpretation of the dates at which licensed and approved beds are to be counted is neither logical nor rational, since it could result in some beds not being counted as either licensed or approved. For example, if beds were approved and not yet licensed on June 1, 1986, but licensed before the consultant supervisor signed the SAAR (state agency action report), they would not be counted in either inventory. On the other hand, the other parties' approach would ignore all beds licensed or approved from previous batching cycles after June 1, 1986 which beds were intended to serve at least a portion of the future population. The fundamental flaw in the parties' approach to establishing an inventory date under subparagraph (b)9, was the assumption that subparagraph (b)7 of the former rule defined licensed bed inventory for purposes of subparagraph (b)9. The Department's rule must be construed in its entirety, and all parts of the rule must be construed so as to work harmoniously with its other parts. So construed, the only logical conclusion to be drawn, as hereinafter demonstrated, is that subparagraph (b)7 defines LB and LBD ("current" licensed beds) for the cross need calculation under the methodology defined by subparagraphs (b)1-4, and does not presume to define licensed beds for the net need calculation under subparagraph (b)9. Subparagraphs (b)1-4 and 7 of the numeric need methodology prescribed by the former rule is designed to yield a gross bed need for the horizon year. The keys to this methodology are the calculation of a current bed rate (BA) and current occupancy rate (OR) for the current using population, and the projection of those rates on the population to be served in the horizon year. A meaningful calculation of the current bed rate cannot, however, be derived without a current inventory of licensed beds (LB and LBD). Accordingly, the relationship between subparagraph (b)7, which defines the data base (June 1, 1986 in this case) for defining LB and LBD (the "current" licensed bed inventory) to the gross bed need calculation is apparent. The parties' suggestion that subparagraph (b)7 defines licensed bed inventory under subparagraph (b)9 not only ignores the inextricable link between subparagraph (b)7 and the gross bed need methodology, but also the language and purpose of subparagraph (b)9. The purpose of that subparagraph is to derive a realistic estimate of actual (net) bed need in the horizon year. Since all licensed and approved beds from previous batching cycles were intended to serve at least a portion of the horizon population, it would be illogical to ignore any of those beds when calculating net need. Accordingly, it would be unreasonable in this case not to count any beds that were licensed or approved from previous batching cycles between June 1, 1986, and the date a decision is rendered on these applications. Indeed, subparagraph (b)9 speaks to "the total number" of licensed and approved beds, not beds existent on June 1, 1986. In sum, subparagraph (b)7 cannot be read to define licensed bed inventory under subparagraph (b)9, and the parties' suggestion that it can is rejected as contrary to the clear language of the rule methodology. See: Boca Raton Artificial Kidney Center, Inc. v. Department of Health and Rehabilitative Services, 493 So.2d 1055 (Fla. 1st DCA 1986). Since the purpose of subparagraph (b)9 is to calculate a realistic estimate of the net bed need for the horizon year, it is appropriate to use the most current inventory of licensed and approved beds at the point a decision is rendered on an application. This assures to the greatest extent possible that the horizon population will not be over or undeserved. In those circumstances where the SAAR becomes final agency action, the Department's approach of calculating inventory on the date the supervisory consultant signs the SAAR, assuming that inventory includes licensed and approved beds on that date, might be reasonable. However, where, as here, the SAAR constitutes only preliminary agency action, and a de novo review of the application is undertaken, there is no rational basis for subsuming that inventory. The rule methodology considered, the only rational conclusion is that net need be derived on the date of de novo review, and that it be calculated reducing the gross need calculation by the inventory of licensed and approved beds from previous batching cycles existent on that date. As of the date of administrative hearing there were 1,056 licensed beds and 120 approved beds in the subdistrict. Applying the methodology prescribed by subparagraph 2i to the facts of this case calculates a net need of 145 community nursing home beds for the July 1989 planning horizon. Special Circumstances. The Department will not normally approve an application for new or additional nursing home beds in any service district in excess of the number calculated by the aforesaid methodology. Rule 10-5.011(1)(k), Florida Administrative Code. Succinctly, the need for nursing home services, whether they be general or special, is a product of the rule methodology, and not relevant to a calculation of need absent a demonstration of special circumstances. The Department has adopted by rule the methodology to be utilized in demonstrating special circumstances that would warrant a consideration of factors other than the numeric need methodology in deciding the need for nursing home services. That rule, 10-5.011(1)(k)2; Florida Administrative Code, provides: In the event that the net bed allocation is zero the applicant may demonstrate that circumstances exist to justify the approval of additional beds under the other relevant criteria specifically contained at Section 10-5.011. Specifically, the applicant may show that persons using existing and like services are in need of nursing home care but will be unable to access nursing home services currently licensed or approved within the subdistrict. Under the provision, the applicant must demonstrate that those persons with a documented need for nursing home services have been denied access to currently licensed but unoccupied beds or that the number of persons with a documented need exceeds the number of licensed unoccupied and currently approved nursing home beds. Existing and like services shall include the following as defined in statute or rule, adult congregate living facilities, adult foster homes, homes for special 505 home health services, adult day health care, adult day care, community care for the elderly, and home care for the elderly. Patients' need for nursing home care must be documented by the attending physicians' plans of care or orders, assessments performed by staff of the Department of Health and Rehabilitative Services, or equivalent assessments performed by attending physicians indicating need for nursing home care. In the instant case, some of the applicants have proposed special services, including an Alzheimer's unit, subacute care unit, and beds for technology dependent children. They offered, however, no proof that any person with a documented need for such services had been denied access to available beds that the number of persons with a documented need exceeded the number of available beds. Succinctly, there is no credible proof that the need for nursing home services in Lee County exceeds that calculated pursuant to the numeric need methodology. While there are no special circumstances existent in this case that would justify an award of beds in excess of that calculated by the rule methodology, that does not mean that consideration of the Alzheimer's, subacute and technology dependent children services offered by some of the applicants is not relevant to the comparative review of the subject applications. Rather, it means that the need for such services will presumptively be met within the need calculated by the rule methodology. How the applicants propose to address that need is, however, a matter for consideration in a comparative review of their applications. Each of the applicants propose to provide subacute care, with Careage proposing a special 10-bed subacute care unit which would accommodate technology dependent children. HCR and Careage propose special Alzheimer's care units; a 15-bed unit by HCR and a 21-bed unit by Careage. Hillhaven will admit Alzheimer's disease patients as presented, and will develop a dedicated Alzheimer's unit if demand should subsequently develop. The prevalence of Alzheimer's disease and the increased demand for subacute services brought about by DRGs, demonstrates that there will be a demand for such services within existing and proposed facilities. There was, however, no persuasive proof of any demand for technology dependent services in Lee County. While there is a demand for Alzheimer's disease care, and the preferred mode of care is in a separate unit specifically designed, staffed, and equipped to deal with this degenerative disease, there was no persuasive proof that the demand is such as to warrant the creation of a separate unit such as proposed by HCR and Careage. 10/ Absent such quantifiable demand, the application of Hillhaven more realistically addresses the need for Alzheimer's disease patients than does that of the other applicants. With regard to subacute care services, the proof likewise fails to quantify the demand for such services. Under such circumstances, Careage's proposed 10-bed subacute care unit is not objectively warranted, and does not serve to better its proposal to provide such services over the proposals of the other applicants. Consistency with district plan and state plan The District 8 health plan contains the following pertinent standards and criteria: Community nursing home services should be available to the residents of each county, 4 within District Eight. At a minimum, community nursing home facilities should make available, in addition to minimum statutory regulation, in the facility or under contractual arrangements, the following services: a. pharmacy h. occupational therapy b. laboratory i. physical therapy c. x-ray j. speech therapy c. dental care k. mental health counseling e. visual care l. social services f. hearing care m. medial services g. diet therapy New and existing community nursing bed developments should dedicate 33-1/3 percent of their beds to use for Medicaid patients. Community nursing home (skilled and intermediate care) facilities in each county should maintain an occupancy rate of at least 90 percent. No new community nursing home facility should be constructed having less than 60 beds... Each nursing facility should have a patient transfer agreement with one or more hospitals within an hour's travel time, or the nearest hospital within the same county. All community nursing homes and applicants for community nursing homes should document their history of participation in Medicaid and Medicare programs. ... The State Health Plan contains the following pertinent goals: GOAL 1: TO DEVELOP AN ADEQUATE SUPPLY OF LONG TERM CARE SERVICES THROUGHOUT FLORIDA. GOAL 2: TO ENSURE THAT APPROPRIATE LONG TERM, CARE SERVICES ARE ACCESSIBLE TO ALL RESIDENTS OF FLORIDA. Each of the applicants demonstrated that their proposal would conform, at least minimally, with the foregoing provisions of the state and local health plans. Of particular significance to Lee County is, however, an applicant's commitment to Medicaid service. The District 8 Council has reported that hospitals in Lee County are having difficulty placing Medicaid patients in nursing homes due to the unavailability of Medicaid beds. The current Medicaid experience is 46 percent. Therefore, the local council has directed that new and existing community nursing home developments should dedicate at least 33-1/3 percent of their beds for Medicaid patients. While all applicants propose to meet this standard, Hillhaven's proposal to dedicate 53 percent of its beds to Medicaid care is substantially greater than the commitment of the other applicants, and is consistent with its current experience in meeting a community's need for nursing home care. Availability, appropriateness, and extent of utilization of existing health care services Section 381.705(1)(b), Florida Statutes, requires Consideration of the availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services in the service district. When the subject applications were filed, there were 1,056 licensed beds in Lee County with an occupancy rate of 91.91 percent. The nursing home bed supply in Lee County is obviously strained, and there exist no reasonable alternatives to the addition of new beds to the subdistrict. To coordinate with existing health facilities, each applicant proposes to establish appropriate transfer agreements and affiliations with local physicians, hospitals, and other health care providers. While some of the applicants have proposed an Alzheimer's unit and subacute care unit, the proof failed to demonstrate any quantitative need for such units in the subdistrict. Some applicants also proposed to provide day care in conjunction with their nursing home. Currently, there exists adequate day care in Lee County at little or no expense to the patient, and there was no persuasive proof of a need for additional day care services. Economies derived from joint health care resources HCR and Hillhaven each proposed 120-bed facilities which would provide for a more efficient and economical operation than a 60-bed facility. The 60-bed facilities proposed by Forum and Health Quest are, however, part of a larger complex which likewise lends itself to an efficient and economical operation. HCR, Hillhaven, Forum and Health Quest are major operators of nursing home facilities, and are thereby able to negotiate and obtain bulk prices for food, medical and nursing supplies. These savings are ultimately passed on to the residents. Additionally, by drawing upon a broad spectrum of expertise existent within their corporate networks, these applicants are best able to maintain and improve the services they offer. The criteria on balance In evaluating the applications at issue in this proceeding, none of the criteria established by Section 381.705, Florida Statutes, or Rule 10- 5.011(k), Florida Administrative Code, have been overlooked. As between the competing applicants, consideration of those criteria demonstrates that Hillhaven is the superior applicant whether it is evaluated on its application as initially reviewed by the Department or as updated at hearing. Among other things, the Hillhaven facility is spacious with large and well appointed patient rooms, its project costs are most reasonable (whether type 5 or type 4 construction), its programmatic proposal and staffing levels are most reasonable in light of existing demand, its provision for Medicaid services is the highest, and its patient charges are the lowest.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered granting Hillhaven's application for a certificate of need to construct a new 20-bed community nursing home in Lee County, and denying the applications of HCR, Forum, Health Quest and Careage. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 22nd day of November, 1988. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of November, 1987.
Findings Of Fact Valerie Humphrey is a Licensed Practical Nurse holding License No. 27860-1 issued by the Florida State Board of Nursing. Notice of the formal hearing in the above style cause was provided to the parties in accordance with the provisions of Chapter 120, Florida Statutes. On October 25, 1975 Valerie Humphrey was employed as a Licensed Practical Nurse at Florida Convalescent Home, Melbourne, Florida. On that date, Valerie Humphrey was observed by Alma Bourne, then employed as a Nurses' Aide at Florida Convalescent Home, attempting to give medication, to wit, an aspirin, to a patient at said convalescent home. When the patient refused to take the medication, Mrs. Humphrey took the patient's walker away from her. The patient was eighty (80) years old and needed the walker to move about. On the same date, Mrs. Bourne observed Valerie Humphrey attempt to administer a laxative to a male patient, Ernest Price, who spit out the laxative twice, whereupon Valerie Humphrey slapped him hard enough to bring a welt to the side of his face. After striking the patient, Humphrey did not try to administer the laxative again. The Director of Nursing at Florida, Convalescent Home testified that physical injury and intimidation were not necessary or appropriate to force medications on patients at the nursing home. Other means of administering the medications to include giving them in combination with foods or drinks, were generally used with uncooperative patients.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, the Hearing Officer recommends that the license of Valerie Humphrey, L.P.N., License Number 27860-1, be suspended for a period not to exceed six (6) months; further, that the order of the Florida State Board of Nursing be communicated to any other State or territory of these United States in which Valerie Humphrey is also licensed. DONE and ORDERED this 16th day of December, 1976 in Tallahassee, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Julius Finegold, Esquire 1130 American Heritage Building Jacksonville, Florida 32202 Geraldine B. Johnson, R.N. State Board of Nursing 6501 Arlington Expressway - Bldg B Jacksonville, Florida 32211 Valerie E. Marsh Humphrey, L.P.N.
The Issue The issue presented for determination herein is whether or not F.A.C. Health Care, Inc., d/b/a Spring Hill Health Facility (Petitioner) is entitled to a Certificate of Need to establish a 60-bed nursing home to serve Hernando County.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at hearing, including the pre-hearing stipulation, the following relevant facts are found. F.A.C. Health Care, Inc. is a wholly-owned subsidiary of First American Corporation. First American Corporation has owned, operated and developed approximately 75 long-term care and retirement facilities over the past 15 years. These operations are primarily located in the southeastern United States. At present, First American Corporation operates 20 facilities and has seven Certificates of Need in the developmental stages. (TR. 35, Fulmer) On January 14, 1984, Petitioner filed an application with the Respondent for a Certificate of Need to construct and operate a community nursing home in the City of Spring Hill in Hernando County, at a total cost of $3,180,000. (Petitioner's Exhibit 1) The letter of denial accompanying the state agency action report dated April 30, 1984, noted the basis for denial as follows: Existing and approved bed capacity in Citrus/Hernando Counties is sufficient to satisfy projected need for 1986. There are 60 nursing home beds that have been approved but have not been constructed at the present time, which, when added to the existing nursing home bed supply in Citrus/Hernando Counties, will serve to satisfy a portion of the projected need for skilled nursing home beds in the sub-district through 1986. The proposed 120 beds are in excess of the 37 beds needed to reduce the prospective base utilization rate to a reasonable level by 1986. (TR. 36, Fulmer; Petitioner's Exhibit 2) On September 26, 1984, Petitioner amended its original application to reflect a reduction from 120 to 60 nursing home beds. Documents reflecting the corresponding reduction in project costs from 53,180,000 to 51,780,000 were submitted with the amended proposal. (Petitioner's Exhibit 3) FINANCIAL FEASIBILITY OF THE PROPOSED SPRING HILL FACILITY The immediate and long-term financial feasibility of a project is one criteria considered during the Certificate of Need review process. Section 381.494(6)(c)9., Florida Statutes. The total cost of the project of 51,780,000 appears reasonable and in line with similar projects. Funds for full 100 per cent financing of the project are available through industrial revenue bonds at 14 per cent interest over 30 years. In order to acquire an industrial revenue bond application, Petitioner would maintain a $150.000 debt service reserve fund. (Petitioner's Exhibit 3) Other methods of financing available to finance the subject project include conventional financing, syndicated equity programs and insurance investment programs. (Testimony of Fulmer at TR. 39-40) Due to the largely rural setting, projected utilization for the first year would be 81 per cent Medicaid, 5 per cent Medicare and 14 per cent private pay. Occupancy is projected to reach 97 per cent by the fifth full month of operation and would be supported in part by the increased utilization of nursing home beds as a direct result of the implementation of diagnostic related groupings. Pro forma statements for the first and second years of operation show a net operating profit beginning in the ninth month and continuing through the second year. The equipment costs, staffing patterns and personnel budget also appear reasonable for this type of project. METHODS AND CONSTRUCTION COSTS Another issue in this proceeding was whether Spring Hill satisfied the criteria in Section 381.494(6)(c)13., Florida Statutes, regarding the cost and methods of construction. Spring Hill's proposed facility will provide 11,981 square feet devoted to patient care and 9,710 square feet for administrative and common service areas at a construction cost of $41.50 per square foot. (Petitioner's Exhibit 3) Proposed construction costs and methods of construction efficiently minimize square footage space requirements and related construction costs and will permit the most efficient operation of the facility at a low per diem cost. The construction cost appears reasonable and is also supportive of a primarily Medicaid based facility. Finally, Respondent offered no evidence to controvert the reasonableness of construction costs and methods proposed by Petitioner. IMPACT ON HEALTH CARE COSTS Section 381.494(6)(c)12., Florida Statutes provides that as part of the Certificate of Need review, probable impact of the proposed project on the cost of providing health care services be considered. Petitioner's expert, Fulmer, urges that there would either be no impact on the cost of care or due to the availability of additional Medicaid beds, costs would be reduced since the private pay demands of family and relatives having to pay for the care of an individual rather than participating in the Medicaid program would reduce the costs of health care to the community rather than increase the financial burden. In this regard, Petitioner offered no evidence to substantiate the claim that the demand for Medicaid beds exceeded the supply, or that Medicaid patients had been refused health services by the available Medicaid health care providers. AVAILABILITY AND ACCESSIBILITY OF EXISTING SERVICES Hernando County lies within HRS District III which is composed of 16 counties in north-central Florida, stretching from the Gulf of Mexico north of Tampa to the Georgia border. (Petitioner's Exhibit 6) The District is further divided into sub-districts. Hernando County represents a separate sub-district. Petitioner's facility is proposed to be located in the City of Spring Hill, located in the fastest growing area of Hernando County. (Petitioner's Exhibits 1 and 2) The latest bulletin (No. 69) from the University of Florida, Bureau of Economic and Business Research, shows a 90 per cent projected growth between 1980 and 1990. Much of the population in the Spring Hill area falls in the 65 and older age bracket. County age group projections released by HRS on September 24, 1984, reveal that the elderly population of 65 and over in Hernando County in 1985 is projected as 17,616, or approximately 27 per cent of total population. By 1990, those projections will grow to 24,887 or approximately 29 per cent of total population. (Respondent's Exhibit 2) The growth trend in Hernando County is an extension of the rapid coastline development occurring in the New Port Richey- Clearwater areas and the counties to the south of Hernando. Previously, the only major development in Hernando County was centered in Brooksville, the middle of the county. Consequently, the existing community nursing home services in Hernando County are concentrated in the Brooksville area. Although Petitioner, through its expert (Konrad) testified that there is a mal-distribution of existing beds and community nursing home services which renders them neither available nor accessible to the rapidly growing elderly population in the southwestern Hernando County corridor and that high occupancy rates in existing community nursing homes in the area and the existence of waiting lists corroborates the lack of availability and accessibility of community nursing home services in the area, the evidence introduced herein failed to establish either the existence of waiting lists or that the existing community nursing homes in the area were overcrowded. SHELTERED VERSUS COMMUNITY NURSING HOME BEDS Petitioner contends that certain nursing home beds associated with the adult congregate living facility at Evergreen Woods in the Spring Hill area are not actually available and accessible to the general public but instead are functioning as sheltered nursing home beds. Respondent, on the other hand, considers the 60 nursing home beds associated with Evergreen Woods to be available and accessible to the general public. A review of the entire record compiled herein failed to substantiate Petitioner's claim that those beds at Evergreen Woods are unavailable and/or inaccessible to the general public. DETERMINATION OF NEED, SECTION 381.494(6)(c)1., FLORIDA STATUTES. In determining need for nursing home beds, a Certificate of Need project is reviewed on a 3-year planning horizon. In this case, predicted need for nursing home beds in District III and the sub-district of Hernando County is calculated through 1987. Hernando County is a single county sub-district located within in HRS planning District III in north central Florida. HRS has determined the overall nursing home bed need for District III as well as sub-district allocations by applying the uniform nursing home bed need methodology for community nursing home services contained in Florida Administrative Code Rule 10- 5.11(21). (Petitioner's Exhibit 5) Respondent provided a step-by-step application of the community nursing home bed need rule and introduced their exhibits supporting the calculation period (Testimony of expert medical facilities consultant, R. Jaffe and Respondent's Exhibits 1 and 2). Briefly stated, application of the pertinent rules reveals an extrapolated need for 31 beds which are available for CON approval based on data available to Respondent on June 29, 1984 and that 36 beds are available based on later data released on September 24, 1984. (TR. 91, Conrad; TR. 130, Jaffe and Petitioner's Exhibit 6) The census report applicable herein reflects that there were 360 licensed beds in the Hernando sub-districts and no approved beds for a total of 360 beds. 2/ Application of the nursing home bed need methodology is not the sole factor used in determining whether a CON application should be granted. Other factors, such as access, high occupancy rates, chronically underserved population and high Medicaid utilization are definite factors in approval of additional beds in cases where the rule shows either no need or only slight need. Respondent has, on several occasions, granted 60-bed applications where accessibility issues justified the grant of a minimum-sized facility in spite of the lesser numerical need indicated under the rules. 3/ Petitioner referred to instances wherein Respondent had granted approval for CON's in other districts where there were unusual circumstances such as accessibility issues as referred to herein above. A review of those cases reveals that a departure from the usual bed-need methodology is warranted in cases of extremely high occupancy rates (95 per cent or higher) or the facilities with lower occupancy rates, e.g. 85.7 per cent for homes in Sarasota County, which were located in inaccessible distances away from the population concentration. Petitioner has not demonstrated sufficient basis herein to warrant a departure from the usual bed need rule methodology. The instances wherein a departure from the usual bed need rule methodology has occurred are distinguishable, inasmuch as in the instant case, there are three existing facilities presently in Hernando County offering 360 nursing home beds. Current occupancy rate has been shown to be reasonable and is standing at or below average for District III. Additionally, Respondent introduced a "Stipulation of Settlement" dated September 28, 1984 which was entered into by and between Evergreen Woods Health Care Center and Respondent. The substance of that stipulation reveals that during October of 1983, Evergreen Woods Health Care Center (EWHCC) as Petitioner, filed an application with Respondent for a Certificate of Need to add 60 beds to its existing 60-bed nursing home located in Spring Hill, Hernando County, Florida. The application sought 45 community beds and 15 sheltered beds. As a means of amicably resolving that proceeding and based on available need data based on applicable quarterly census reports and application of the need criteria, EWHCC, as Petitioner in that proceeding, amended its Certificate of Need application filed October, 1983, to add a total of 60 beds to its existing facility; 31 beds to be designated as community beds and 29 to be designated as sheltered beds. A review of the public records reveal that the Certificate of Need has been issued (amended CON No. 2959 issued early October, 1984) pursuant to that stipulation of settlement. 4/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that: The application of First American Corporation d/b/a Spring Hill Health Facility for establishment of a 60-bed nursing home facility in Hernando County, Florida, be DENIED. RECOMMENDED this 14th day of February, 1985, in Tallahassee, Florida. JAMES E. BRADWELL 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 14th day of February, 1985.
The Issue Whether Respondent violated the duly promulgated rules of the Department of Health and Rehabilitative Services by designating and continuing to designate the same person as the Assistant Administrator and the Director of Nursing of the Bonifay Nursing Home, Inc., after having been cited for such deficiency and allowed sufficient time to correct the deficiency.
Findings Of Fact An Administrative Complaint was filed by Petitioner Department of Health and Rehabilitative Services on October 27, 1980 notifying Respondent Bonifay Nursing Home, Inc., a skilled nursing care home, that Petitioner intended to impose a civil penalty of $100 for violating duly promulgated rules by designating the same person to act as Assistant Administrator and Director of Nursing of the nursing home. At the formal administrative hearing the Administrator admitted that he served more than one health facility, that at all times pertinent to the hearing the acting Assistant Nursing Home Administrator was also designated as the Director of Nursing, and that she was the only registered nurse on duty. It was admitted that no change had been made after the inspector for the Petitioner Department had called attention to this alleged violation until after the time period allowed for correcting this situation had expired and after the Petitioner had informed Respondent it intended to impose a $100 civil penalty. In mitigation Respondent presented testimony and adduced evidence showing that as the owner and operator of the nursing home he had made an effort to employ registered nurses at the home and that on the date of hearing the nursing home was in compliance with the statutes, rules and regulations. It was evident to the Hearing Officer that the nursing home serves a need in the community and that the residents appreciate the service. Petitioner Department submitted proposed findings of fact, memorandum of law and a proposed recommended order, which were considered in the writing of this order. Respondent submitted a memorandum. To the extent the proposed findings of fact have not been adopted in or are inconsistent with factual findings in this order, they have been specifically rejected as being irrelevant or not having been supported by the evidence.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law the Hearing Officer recommends that a final order be entered by the Petitioner assessing an administrative fine not to exceed $50. DONE and ORDERED this 10th day of February, 1982, in Tallahassee, Leon County, Florida. DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of February, 1982. COPIES FURNISHED: John L. Pearce, Esquire Department of Health and Rehabilitative Services 2639 North Monroe Street, Suite 200-A Tallahassee, Florida 32301 Mr. J. E. Speed, Administrator Bonifay Nursing Home 108 Wagner Road Bonifay, Florida 32425 David H. Pingree, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
Findings Of Fact Respondent, Department of Health and Rehabilitative Services (HRS, Department,) is the state agency empowered to review, grant, or deny certificate of need applications. Careage Aire filed a certificate of need application with the Department proposing a new 60 bed nursing home for Escambia County, Florida. The application was assigned certificate of need #4660 by HRS and was reviewed in the July, 1986 batching cycle. The Department recommended denial of the certificate of need application on January 27, 1987, in a "State Agency Action Report." The parties to this cause submitted a joint prehearing stipulation which narrowed the issues to be presented at final hearing. The factual issues remaining for determination are thus as follows: Whether there is a need for the nursing home facility proposed; The appropriate inventory of licensed or approved beds in the relevant planning district; The appropriate occupancy rate for nursing home beds in the relevant planning district; The relevant population projection figures to be utilized in accessing the need for Careage Aire's proposed facility; Whether there is a need for the special services to be provided by Careage Aire; Whether the proposed patient charges for sub-acute care and private VA care are reasonable. The stipulated legal issues requiring determination include: Whether there is a need for the nursing home facility proposed; Whether there is a need for the proposed special services; Which time period should be used to fix the relevant population, occupancy rate, and bed inventory for review of the application. Additionally, it was stipulated that a timely petition for formal hearing was filed, and that the letter of intent was timely filed. It was also stipulated that the applicant is financially capable of proceeding to construct and operate the proposed project, that the applicant is capable of providing quality of care sufficient to meet pertinent regulatory requirements, and that the construction costs projected by the applicant, Petitioner, are reasonable. The Proposed Project Careage is a group of corporations owned by Gene E. Lynn, who has been involved in the nursing home industry for a long period of years. In the past, Careage has built more than 250 hospitals, nursing homes, and health-related facilities. It has built such facilities in approximately 30 states, centering its activities on the west coast of the United States. Careage does not currently operate any nursing home facilities in Florida, but has a number of applications pending. Careage is proposing to provide what might be termed an "upscale" nursing home in the sense of its providing certain special services and programs not commonly offered at nursing homes in Florida. This package of special services and programs is similar to those Careage operates at nursing homes in other states. Careage Aire, in proposing to construct a new 60 bed nursing home, has designated 21 beds for a discreet unit for the care of Alzheimer's disease patients. It will be a self- contained unit separate from the rest of the nursing home. Additionally, 5 beds will be provided for sub-acute services which, generally, are services involving more intense medical care or therapy than is the case in the normal skilled nursing home. Sub-acute services are analogous to those provided at extended care centers operated by hospitals for patients who are no longer required by their medical conditions to be actual inpatients in the hospital. Two of the beds proposed are identified as being dedicated to the treatment of technology dependent children, that is, children who are dependent upon machines or other devices for treatment or life support, such as ventilator patients. Additionally, Careage will provide other special services such as adult day care and respite care services at its proposed facility, those generally being described as part time residence in the nursing home by the patients involved. The facility proposed will be similar in design to the Careage facility in Coupeville, Washington. This design allows for various amenities and interior design features designed to enhance the quality of care rendered. Careage will thus provide an innovative semiprivate room bed configuration, which places the patients and beds "foot to foot" rather than beside each other. This configuration has been used in other nursing homes and it has been determined that this allows patients to more readily communicate with each other and enables them both to have a window view. The proposed facility will have a television receptacle across from every bed with speakers on the pillows so that residents can watch or listen to television without disturbing their roommates in a semiprivate room. Additionally, Careage Aire will provide three separate patient areas for residents. These areas will be the lobby, passive activity room and an active activity room. The "active room" will have crafts, paints, or other activities available to engage in, with the "passive" room being devoted to such activity as reading, card playing and other more sedate pursuits. As part of the normal family activity, Careage will open its dining room to the general public on Sundays. It has been found at other facilities that such a practice encourages the quality of care within its facility, by being regularly exposed to the public view. Additionally, the Petitioner will have such amenities as a popcorn machine and aquariums in the walls of the entrance lobby, which although not directly related to quality of nursing care, do represent amenities very popular with residents and contribute significantly to the residents and their families sense of well-being and confidence in the quality of service rendered. Appropriateness of Specialized Services in Nursing Home Setting The application proposes to provide several specialized services. Among those services are an Alzheimer's unit, sub-acute care unit and the provision of specialized care to technology dependent children. Alzheimer's disease is a degenerative neurological condition occurring most often after age 55. It is apparently an irreversible deterioration of brain cells and is characterized by short term memory loss, behaviorial changes and changes in personality accompanied by mood swings, and often manic depressive symptoms. In its final stages, patients usually become incontinent and are often not aware of their surroundings nor recognize family members. Such patients often become disoriented, restless, and combative and lose their ability to recognize places, people and other sensory stimuli. They also seem to lose their sense of time, and go through stages of wandering. Careage Aire proposes to provide a distinct 21 bed Alzeheimer's unit at the proposed facility. The provision of care for Alzeheimer's patients in a separate unit from other nursing home patients was shown to be the most appropriate way to care for them. This is because they can be offered specialized services, designed to fit their particular needs with less external stimuli and a more predictable environment. This tends to diminish the effects of many of the Alzheimer's symptoms which become more apparent when Alzheimer's patients are placed with other patients in a regular nursing home unit setting. The combative behavior of Alzheimer's patients can be alleviated by providing for their separate care in a specialized unit. They can tend to maintain their mental levels at the highest degree in a unit of the type proposed by the applicant. The rooms for instance will be identified not only by a room number, but also by distinct physical identifiers, which are color coded. This will allow the individual patient four different means of recognition of which room is his. Additionally, Careage Aire will provide a specially trained staff within the unit to assist in the proper diagnosis of Alzheimer's patients. In certain cases, Alzeheimer's patients are being misdiagnosed when they are merely experiencing drug interactions or other medical conditions which result in similar symptoms. The proposed design for the Alzheimer's unit includes a doorway separating it from the rest of the nursing home facility. The unit contains a control station for nursing supervision, activities and dining room, and a quiet room. At the back of the unit is a door opening onto a walkway within an attractively walled area where patients can walk and receive exercise and yet not wander into unsafe areas. In the walled area is a covered area for a picnic table and a resting bench. The area for walking enables the Alzheimer's patients who are subject to wander, to do so in a safe environment. The planning, physical layout and the training of the staff proposed by the applicant for the Alzheimer's unit constitutes appropriate quality care for Alzheimer's residents. None of the existing nursing homes in the County provide a true distinct Alzheimer's unit. Although existing nursing homes accept such patients and care for them in a nursing home floor setting, the treatment of Alzheimer's patients in a specialized and distinct unit is more effective, economical and appropriate. The types of services proposed to be provided by the applicant in this unit would result in the treatment of such patients in the least restrictive, most humane and economically feasible manner. Existing nursing homes in Escambia County often do not choose to deal with "heavy" care patients, which may result in their being discharged when their best interests would dictate otherwise. The applicant established that physicians treating patients with Alzheimer's disease in the area would refer them to Careage Aire for placement in an Alzheimers unit if it were built. Sub-Acute Care Services The applicant has allocated five of the proposed beds for sub-acute care patients. Sub-acute care has not been provided in nursing homes traditionally, since it is a more intensive type of care, normally associated with the extended care facilities operated by hospitals. Careage, however, has experience in other states in providing such services in a nursing home setting. The definition of this type service proposed by the applicant (and adopted in the State of California) includes numerous services such as hyper-alimentation, IV therapy, IV antibiotic therapy, morphine drip therapy, ventilators, IPPB treatments, heparin flush, infusion pumps for the administration of fluid, kangaroo pumps for tube feeders, specialized inhalation therapy treatments, and concentrated rehabilitative therapies. These services are similar to care provided in extended care beds operated by acute care hospitals. The provision of sub-acute care services is appropriate in a nursing home setting such as this. The existing nursing homes are not accepting ventilator dependent patients, for instance, and the early patient discharge from hospitals, mandated by the federal "DRG" system of reimbursement, has served to increase the need for "heavy care" of the type proposed for patients in non-hospital settings. Careage Aire also proposes to provide services for "technology- dependent" children, allocating two beds for that purpose. Providing such care for children is a new concept, but is increasing as medical technology becomes more advanced, which results in the survival of a large number of children who are ill or severally injured who would have died in former years. Such children with birth defects, brain damage, injuries from accidents, or neuromuscular disease often require specialized care which could be provided in a nursing home setting. Such care is less restrictive and more appropriate than housing such pediatric patients in an acute hospital setting. Additionally, the intermingling of younger patients with elderly patients can sometimes have a beneficial psychological impact on both patient groups. The local hospitals in the Pensacola area are experiencing difficulty in placing pediatric patients who require skilled care after hospital discharge. There are two such patients in the children's hospital associated with Sacred Heart Hospital in Pensacola at the time of this hearing and an additional two such patients in the neonatal unit of Sacred Heart Hospital. Placement of these ventilator dependent children has been an ongoing problem for the director of social work at Sacred Heart Hospital. In one instance, the director was required to look for placement for such a child for over seven months. The director of social work at Sacred Heart Hospital would use a nursing home such as this one proposed by Careage Aire which would accept Medicaid "ventilator- dependent" children and would consider the availability of that service in discharge planning for such patients. Existing Escambia County nursing homes are not accepting ventilator patients. Baptist Hospital in Pensacola does offer ECF services, but does not accept Medicaid patients into its ECF beds. Careage Aire also proposes to provide both adult daycare and respite care services at its nursing home facility. The provision of such services, involving elderly residents staying only a portion of the day or for a limited number of days at the nursing home facility before changing their residency back to their family homes, is certainly an appropriate and patient benefiting nursing home service. Need for Proposed Beds The proposed project is located in HRS service District 1. Sub- district 1-A of District 1 is composed of Escambia and Santa Rosa Counties. In determining need for a particular project, health planners utilize the inventory of licensed and approved beds for a district or sub-district, as the case may be. Additionally, need is projected within a given "planning horizon" for a service district or sub-district. For the July, 1986 nursing home batching cycle, in which this application was filed and reviewed, the relevant planning horizon is July, 1989. In Escambia County, there are 1,024 licensed community nursing home beds, with 30 sheltered beds and 140 "approved" community beds. Santa Rosa County has 180 licensed beds and 120 "approved" beds. In Sub- district 1-A there are 1,204 licensed community beds, 30 sheltered beds, and 260 approved community beds for the July, 1989 planning horizon. In determining the numerical need for nursing home facilities, the Department utilizes the "nursing home bed need rule" appearing at Rule 10.5.011(1)(k), Florida Administrative Code. That rule methodology for numerical need is referenced in the State Agency Action Reports regarding this application. Utilizing the bed inventory as of the application's filing date and utilizing a 90.94 percent occupancy rate for Sub-district 1-A, there results an 18 bed surplus, over actual need, for Sub- district 1-A as a whole. The same assumptions and methodology, however, result in a 45 bed, specific need for Escambia County itself. The Department's bed need rule states that "current" population figures are to be used in determining the population projection for purposes of the need calculation. The term "current", referencing population projections, is not defined in the rule itself, however it is generally taken to mean that which is most recent or "prevalent at the moment." 1/ It is reasonable from a health planning standpoint to utilize the most recent available population estimates for the relevant planning horizon, which is July, 1989. The use of the most current population data increases the accuracy with which the 1989 population forecast can be made. The most recently available population estimates are contained in the January, 1987 population report contained in Exhibit 11. That data, being available, should be employed in calculating need for the proposed beds. The underlying support documents prepared and compiled by the Department for nursing home occupancy and licensed bed inventory, indicate some confusion concerning the number of licensed beds and the occupancy levels at the Azalea Trace nursing home. The occupancy level data for that nursing home, as well as the reported number of licensed beds, show an unexplained fluctuation during relevant time periods involved in this application. The last three months of reported data by Azalea Trace shows that it was running at 96 percent occupancy. For the first quarter of 1987, however Azalea Trace merely indicated greater than 90 percent occupancy based upon 90 licensed beds. The number of licensed beds, however, have been reported as varying between 90 and 60 licensed beds and some reporting periods no data concerning numbers of licensed beds was reported at all. In light of the inconclusive data noted in the underlying source documents and in the absence of data being reported in certain months, it has not been demonstrated that the occupancy data and number of licensed beds contained in data relied upon by the Department (referenced in Exhibits 13 and 14 and transcript pages 89-97) is reliable. It is thus reasonable, from a health planning standpoint, to infer that Azalea Trace enjoyed the same average occupancy rate as other Escambia County nursing homes during the pertinent 6 month period used for determining sub-district occupancy, and such an inference is made at this juncture. No contradictory evidence was adduced. Accordingly, if it be assumed that Azalea Trace operated at the same occupancy rate as other Escambia County nursing homes for the pertinent 6 month period from October, 1985 to March, 1986, the resulting occupancy rate for the sub- district as a whole would be 92.4 percent. This is at variance with the 94.9 percent occupancy rate relied upon by the Department in arriving at the information in the State Agency Action Report. See Exhibit 11. If the occupancy rate of 92.4 percent is used for the sub-district, along with the employment of the most recent available population estimates based upon the January, 1987 reported estimates, discussed above; and if all other factors are static, a net need is shown for Escambia County of 81 nursing home beds for the July, 1989 planning horizon, and a net need of 25 beds in Sub- district 1-A as a whole. Local Health Plan Considerations The Northwest Florida Health Council, Inc. has prepared a local health plan which addresses the need for long-term care in District I. The local health plan dated March 26, 1986, was in force at the time the application was submitted for review and is the most recent version of the local health plan. The local plan lists several priorities for the review of CON applications for nursing homes in that district. Careage Aire's application for 60 beds has been shown to be consistent with the pertinent priorities identified by that plan. Priority number 1 of the local health plan states that counties within sub-districts which indicate a greater need, applying the state rule methodology, will receive priority over proposals for counties within such sub- districts which indicate less need. Application of the state rules methodology to Sub- district 1-A indicates there is a greater need in Escambia County, where the applicant proposes to construct its nursing home, than prevails in Santa Rosa County. Local health plan priority number 2 provides that the county with the greatest percentage of population aged 65 and over, living in poverty conditions, should receive priority over proposals from other counties with less of a corresponding percentage. The percentage of population 65 and older living in poverty in Escambia County was 22.4 percent. This is a greater percentage of persons in such category than were living in Santa Rosa County. Priorities 3 through 7 of that health plan are not applicable to this proceeding or have been satisfied by the application and are not at issue. The local health plan also includes a methodology for determining nursing home bed need. The local health plan methodology is based on a comparison of the percentage of local persons living in poverty between District 1 and the entire State of Florida. The District 1 poverty level is 22 percent, compared to a state average of 12.7 percent. The medicaid occupancy rate for Escambia County, in Sub-district 1- A, is 70 percent, compared to 57 percent for the State of Florida as a whole. If as a "reality check," one applies the local health council methodology (albeit different from the HRS rule methodology) to the data used in calculating need there results a bed need for the July, 1989 planning horizon of 120 beds for Sub-district 1-A as a whole. Need for Specialized Services Aside from the determination of whether a numeric need for a given certificate of need nursing home project exists, it is pertinent to consider specialized services which the applicant proposes. There is no existing Alzheimer's care unit in any nursing home in Escambia County at the present time. The applicant proposes such a unit for Sub-district 1-A. A reasonable estimate of the number of Alzheimer's patients presently in nursing homes in Sub-district 1-A is 367. None of these are in specialized care units. The estimates in the Department's "Alzheimer's Disease Initiative" published in May of 1986, indicate there may be as many as 3,957 Alzheimer's patients in Sub- district 1-A by July, 1989. See Exhibit 17 in evidence. There is a need in Sub-district 1-A, for the sub-acute care services proposed by the applicant. Careage Aire will admit Medicaid patients to its facility, including ventilator dependent patients. These services are not currently available in either nursing home or extended care facilities in the sub-district for Medicaid patients, who have a problem with "financial accessibility" to such services. There is a need for the services proposed to be provided to technology dependent children. There is an existing problem for the hospitals in the Pensacola area in successfully placing "technology dependent children" once they have progressed sufficiently to no longer require acute hospital care. The number of such children requiring ventilators or other speciality equipment is likely to increase with the improvement of medical technology which allows brain damaged or other severely handicapped children to survive, but be dependent upon speciality equipment. Additionally, Careage Aire proposes other speciality services, involving adult daycare and respite care services, which are currently needed in Sub-district 1-A and which would help alleviate some of the problems attendant to financial inaccessibility of nursing home care to some families. It would allow families to place elderly family members in nursing home care during the day while the family members work and allow them to be taken home each night. Such care would often be a feasible alternative for families who can not afford full time nursing home care and for patients whose condition does not necessarily require full-time nursing care, but who are unable to care for themselves if left entirely to their own devices for a full day. Patient Charges The applicant's patient charges or estimated patient charges are enumerated in Exhibit 1, Table 8. The $70 charge for Veteran's Administration patients is reasonable based on the level of care to be afforded and is lower than Careage's experience with such charges in other states in which it operates. The Medicaid charge of $59.50 and the $105 charge for Medicare patients was shown by the applicant's expert to be reasonable and that testimony was unrefuted. The rather unique sub-acute care service was shown to have an estimated charge of $135, which is less than that prevailing at the Baptist Hospital's existing extended care facility. The expert testimony in support of these charges establishes that they are reasonable. In summary, existing nursing home facilities in Sub- district 1-A are experiencing an increase in occupancy which is at high levels at the present time. The Department's bed need rule methodology allows flexibility to grant certificate of need applications even where there is no actual showing of a numeric need under that rule. In the instance situation, when the most current population projections for the static July, 1989 planning horizon are employed, in conjunction with the above found average occupancy levels for the sub- district, there is demonstrated an actual numeric need, albeit not for 60 beds or more for the entire sub-district. There was shown to be an 81 bed need for Escambia County itself. It is also true, however, that in view of the needed special services to be provided by the applicant and the fact that the relevant priorities of the local health plan have all been satisfied by the applicant, a need exists for the proposed 60 bed nursing home facility. In fact, although the rule-mandated methodology must be used in determining the question of numeric need, the rule allows for granting an application even when no numeric need exists by consideration of other factors, including the priorities and goals of the local health plan. It is noteworthy, in a corroborative sense, that the local health plan methodology reveals a need for 120 beds in Sub- district 1-A for the July, 1989 planning horizon. Although this methodology is not mandated to be considered by the Department's numeric need calculation rule, since "other circumstances" can be considered in favor of granting an application, even when numeric need is not shown to exist, such a factor, along with the special services offered by the applicant, corroborates the existence of a need for the proposed project, especially since some need for beds is shown by the "rule calculation" itself.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, and the candor and demeanor of the witnesses, it is, therefore RECOMMENDED that the application of Gene E. Lynn, Careage Aire Health Care Center for a certificate of need authorizing construction and operation of a 60 bed nursing home in Escambia County, Florida, be approved. DONE and ENTERED this 31st of December, 1987, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of December, 1987.
Findings Of Fact Venice Hospital, a general acute care hospital offering 342 medical/surgical beds and 30 bed's for general psychiatric care, services a population of approximately 110,000 people in Southern Sarasota and Northern Charlotte Counties. Approximately 80% of its patients are covered by Medicare. This figure being higher than average, puts it somewhere in the top 5% of Medicare providers in Florida. The hospital's services are concentrated on geriatric patients and it is developing several programs devoted to that type of patient. It has recently received approval for nursing home development and operates a home health agency. Missing from the geriatric spectrum of services is the hospital based skilled nursing facility, (SNF), which is the subject of this action. Sarasota County currently has four med/surg hospitals, including Petitioner which is the only hospital in the Venice area. Petitioner has a licensed psychiatric unit which operates under separate rules and which is licensed separately but within the hospital cycle. The patients which are treated in that unit are of a different demographic make up than those treated in the med/surg beds and the staff which treats them is different. Petitioner completed a study of the potential need for SNF beds in the hospital which led to the conclusion being drawn by it that this service should be established. Mr. Bebee's review of the applicable rules and statutes indicated to him that the hospital could elect to designate a special care unit within the hospital without even having to go through Certificate of Need, (CON), review. A letter was submitted by the hospital to the Department on February 8, 1990, asking for an exemption from CON review for that project. Because no response to that letter was forthcoming, and because the hospital review cycle was fast coming up, on February 22, 1990, Mr. Bebee submitted a LOI to the Department seeking to convert 42 med/surg beds to a hospital based SNF facility at a cost of $310,000.00. After the LOI was sent, on February 26, 1990, Ms. Gordon-Girvin, on behalf of the Department, responded by letter to Bebee's inquiry letter, indicating the CON review process was a necessary part of the process for Petitioner's facility, but that the LOI and application should be filed in the next nursing home batching cycle by April 30, 1990. Shortly thereafter, by letter dated March 13, 1990, Ms. Gordon-Girvin rejected the LOI which Petitioner had submitted in the hospital cycle since, according to the Department, it was properly "reviewable under the nursing home review cycle rather than the hospital review cycle." Notwithstanding that rejection, and understanding the Department's position as to which cycle was appropriate, on March 26, 1990, Petitioner submitted its CON application for this project, modified to seek only 36 beds. By undated letter, the envelope for which was postmarked April 16, 1990, Ms. Gordon-Girvin declined to accept that application for the same reason she had rejected the LOI. Petitioner has since filed a CON application for the same project in the current nursing home cycle, on a nursing home application form. It did this to keep its options open but considers that action as being without prejudice to the application at issue. Though numerical bed need is not in issue in this proceeding, a brief discussion of general need is pertinent to an understanding of why Petitioner has applied for approval of this project. Petitioner is of the opinion that SNF beds within the hospital setting will provide better care for the patients than could be provided in a nursing home. Many of the patients in issue are receiving intravenous applications of medicines; taking antibiotics; require orthopedic therapy; or are in respiratory distress calling for ventilator or other pulmonary procedures. These patients need a continuing level of nursing care on a 24 hour basis but no longer qualify for a hospital continued length of stay. Petitioner currently has and is taking care of such patients in the facility, but would like to do so in a more organized, systematic manner which could be accomplished in a hospital based SNF. In addition, reimbursement rules dictate that patients no longer needing full hospital care but who remain in the hospital, become, in part, a cost to the hospital because no meaningful reimbursement is received for thatlevel of care. They would qualify for Medicare reimbursement, however, if the unit were designated and certified as a SNF. Medicaid does not recognize these beds as reimbursable because they are in a hospital. Certification for the hospital based SNF would be through the Health Care Financing Administration, (HCFA), and the Medicare program. To secure this certification, the hospital based unit would have to be a distinct part of the facility and not merely consist of beds scattered throughout the facility. Once certified, the unit is not referred to as a nursing home by HCFA or Medicare, but is classified as a hospital based unit. Because Petitioner sees this as a hospital project - a service that the hospital would be providing under its license, it chose to file for the approval in the hospital cycle rather than in the nursing home cycle. Bebee is familiar with the certification process for both hospitals and nursing homes. The latter is a lengthier process and is substantially different from that used for hospitals. In his opinion, it does not give the hospital based applicant the opportunity to properly justify the approval of a hospital based SNF since it deals more with the requirements of a community based facility. The nursing home form is highly structured whereas the hospital form makes it easier to identify and supply the appropriate supporting information for the project applied for. Further, Bebee does not consider the hospital based SNF bed in the same context as a community nursing home bed. The type of patient is not the same nor are the resources required to treat that patient. Petitioner has purchased a CON to construct a 120 bed community nursing home within the Venice area which will have some SNF beds in it. Nonetheless, because of the basic difference between the services, it still plans to pursue the hospital based SNF. A Florida Hospital Association study concluded that SNF in hospitals are different and there is a lack of this type of service in the hospitals throughout the state. This study, dated May, 1989, at Page 5 reads: Conversion of hospital beds to nursing home beds could improve the financial viability of hospitals, reduce purchasers' and consumers' health costs, and improve access to care for patients requiring higher levels of nursing care, [if they are needed and meet quality care requirements]. Bebee also points out that if this project is considered in the nursing home cycle rather than in the hospital cycle, it would result in a hospital competing with nursing homes which are seeking a different type of bed - community versus SNF. Current community nursing home bed need is set at 0. Petitioner's nursing home cycle application was filed under the "not normal circumstances" provision, but there may still be substantial contest. This type of litigation, he believes, adds unreasonably and unnecessarily costs and is a resultant financial burden to the hospital. Mr. Balzano, a health care consultant and Petitioner's other expert, confirmed and amplified the substance of Mr. Bebee's thesis. He compared hospital based SNFs with those in community nursing homes and found notable differences aside from the statutes and rules governing each. Petitioner's current beds are controlled under Chapter 395, Florida Statutes, and Rule 10D- 28, F.A.C. If some were converted to SNF beds under the pending application, they would still fall under the purview of that statute and rule. On the other hand, community nursing home SNF beds would be controlled by the provisions of Chapter 400, Florida Statutes, and Rule 10D-29, F.A.C. There is a substantial difference between them. Other differences are: Patients in hospital based SNF beds generally have greater nursing requirements than those in SNF beds in community nursing homes. Staffing in hospital based SNF is generally higher than in free standing nursing homes. The average stay is shorter in a hospital based SNF. Patients are not there for continuing care but for restorative care. The size of a hospital based SNF unit is generally smaller than that in a free standing unit. Costs are usually greater in a hospital based SNF unit reflecting the greater needs of the patient. Therefore, reimbursement is generally higher. Health services in the different systems are different and a comparative review would be difficult. The questions in the different application forms reflect a different approach and in the nursing home application, relate to residential type care. This is not the case in the hospital form. Costs relating to the use of an existing facility would be cheaper for the hospital based unit when compared with building a new nursing home facility. However, the costs of hospital construction are usually higher than nursing home construction though the quality of construction is generally better. The operating costs for the more complex services provided in a hospital based unit are higher and Petitioner would have trouble competing if reimbursement were based on the classification as a nursing home. Higher staffing levels and higher staffing costs in a hospital based facility would act in disfavor of that facility. The state generally looks with greater favor on projects for Medicaid patients. Hospital based units are not oriented toward that group and would, therefore, not be given the same consideration, as would be a nursing home which catered to Medicaid patients. The type of patient, (residential vs. subacute) has an impact. The hospital based unit provides treatment to the more acutely ill patient. SNF patients who need that higher degree of care would get it better at a hospital based facility which has greater resources to meet patient needs. Mr. Balzano feels it is unfair to compare the two types of properties. The differences in the programs would have an impact on the issue of need when comparative review is done. A SNF in the hospital setting is different but would be compared, if the nursing home cycle were used, against the total pool of community nursing home beds even though the patients are different and their need for services are different. Need methodology looks at historical utilization. Hospital based SNF patients turn over more frequently than do community nursing home patients and the occupancy level is not as high in the hospital based setting. This would bring the average occupancy rate in an area down and could affect the need for community beds across the board. It is also noted that hospital based SNF beds would not be appropriate to house community nursing home patients who could not be accommodated in a nursing home, and vice-versa. SNF patients could normally not be appropriately treated in a community nursing home because of their greater needs. If compared in a batched review, however, they would be considered together without that distinction being made. Since all other hospital services are reviewed under the provisions of Chapter 395 parameters as hospitals, Balzano sees it as inconsistent to review hospital based SNF beds under the nursing home criteria. He can find no statutory or rule provision requiring this. The Department has drafted a proposed rule on the subject but that proposal is presently under challenge. Further, Medicare considers hospital based SNF beds and community nursing home based SNF beds as different entities with the hospital based beds earning a higher reimbursement ceiling due to the increased services and the different type of patient. According to Mr. Balzano, in Florida, hospital based SNF beds account for 1/2 of 1% of all hospital beds. Nationwide the figure is 4%. Balzano feels this is because in Florida there is no criteria to judge need against and therefore these beds are compared to all nursing home beds. He considers this wrong, especially in a state where there is such a high percentage of elderly patients. It is, in his opinion, poor health planning, and when compared against other nursing homes, the hospital based SNF unit will always be at a disadvantage. The testimony of Ms. Sharon Gordon-Girvin, Director of the Department's Office of Community Health Services and Facilities, reveals the Department's rationale in its rejection of the Petitioner's LOI for the instant project and the subsequent return of its application. The application was rejected because there was no underlying LOI for the project. The LOI was initially rejected as having been filed in an inappropriate cycle, (hospital). The Department's policy, calling for applications for all extended care or hospital based skilled nursing facility beds to be filed in a nursing home batching cycle has been in place for an extended period going back before 1984. The Department looks at extended care beds and SNF beds as somewhat equivalent but different. The designation of extended care facility beds initially used by HCFA, (Medicare), in hospital situations is no longer applicable. Now, Medicare recognizes SNF beds in hospitals, but does not distinguish them from other types of hospital based beds. The service is considered the same and the patients must meet identical admissions criteria. The reasons relied upon by the Department, from a health planning standpoint, for reviewing applications for hospital based SNF beds in the nursing home cycle are: Medicare conditions of service and admission criteria are the same, and The State nursing home formula rule projects a need for all nursing home beds, (SNF and ICF) , and does not differentiate between type. Providers compete for the beds, not where they will be used or under what conditions. The mere need for special treatment such as ventilators or intravenous antibiotics is not controlling. If the patient does not need the acute care provided to hospital acute care patients, since a "subacute" status is no longer recognized by the state, it is the Department's position that that patient should be in intermediate care status. This position is incorporated in the Departments proposed rule which is currently under challenge. It had been elucidated, however, in both the 1988 and 1990 editions of HRSM 235-1, relating to Certificates of Need, where at section 9-5 in both editions the text reads: 9-5 Skilled Nursing Unite in Hospitals. Beds in skilled nursing units located in hospitals will be counted in the nursing home bed inventory, even though they retain their licensure as general medical surgical beds. In addition, the Florida State Health Plan for 1989 and for each year since 1984, has counted hospital based SNF beds in the nursing home bed inventory. The parties stipulated to that point. Ms. Gordon-Girvin admits that it is sometimes difficult for an applicant to apply for hospital based SNF beds on a nursing home application for, but claims that is as it should be. She asserts that the patients are the same, (disputed), and since, she claims, a hospital cannot provide the same services that a full service nursing home could provide, the applicants should be differentiated on the basis of services rather than patient category to justify the additional cost inherent in the hospital based setting. In short, she believes the current situation is appropriate since it requires the applicant, a hospital, to look more carefully at the terms and conditions of the services to be provided. In so far as this results in health care cost savings, her position is accepted. She also contends that the Florida Hospital Association study relied upon by Petitioner to support its position that hospital based SNF bed applications for distinct units cannot compete fairly against nursing homes in a comparative CON review, is not pertinent here considering it was prepared to examine an excess of hospital bed inventory and possible alternative uses as income sources. Regardless of the purpose of the study, absent a showing that it is unreasonably slanted or biased, its conclusions have not been successfully rebutted. Ms. Gordon-Girvin also contends that the low percentage of hospital based SNF beds as compared to total hospital beds is a positive result of the state's efforts to reduce costly services in favor of less costly alternatives. The Department has the exclusive charter to determine which services are to be reviewed and how the review is to be conducted. Even if the proposed rule formalizing the procedure questioned here is stricken, the policy currently being utilized by the Department would still be valid and appropriate. Psychiatric, substance abuse, and rehabilitation beds in hospital inventories are considered distinct from acute care beds, but are still classified as hospital beds because there are no reasonable alternatives for treatment of those conditions. With regard to those patients using hospital based SNF beds, however, the Department claims there is an alternative, the community nursing home based SNF beds. In further support of the Department's position, Amy M. Jones, the Department's Assistant Secretary for Health Care Facilities and an expert in facility licensing and certification in Florida, pointed our that the Department treats hospital based SNF beds and community nursing home SNF beds the same because: conditions of participation are the same and the Department wants to look at and compare similar activities in the same cycle, and pertinent statutes and rules both provide for comparison of similar beds and similar services. Section 395.003(4), Florida Statutes, defines the various types of hospital beds as psychiatric, rehabilitative, and general medical/surgical acute care beds regardless of how they are used. The HCFA Conditions of Participation call for certification of SNF beds as either a distinct part of another facility or as a free standing facility. The agency regulations, as outlined in The Federal Register for February 2, 1989, outlines the requirement that SNF beds in a hospital be surveyed just as are community nursing home SNF beds. Taken as a whole, it would appear that both federal and state regulatory agencies look at SNF beds, regardless of where located, as an integral part of a nursing home operation as opposed to a hospital operation.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that a Final Order be entered by the Department affirming its rejection of the Petitioner's Letter of Intent and CON application for the conversion of medical/surgical beds to SNF beds filed in the hospital batching cycle. RECOMMENDED this 30th day of August, 1990, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of August, 1990. APPENDIX TO RECOMMENDED ORDER IN CASES NOS. 90-2738 & 90-3575 The following constituted my specific rulings pursuant to S 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: Not a proper Finding of Fact. Accepted and incorporated herein as it relates to Petitioner's filing of the LOI and the CON application. The balance is background information and is not a proper Finding of Fact. 3.-6. Accepted and incorporated herein. Not a proper Finding of Fact but a statement of party position. Accepted and incorporated herein except for first sentence. Accepted and incorporated herein. Accepted. Accepted. &13. Accepted and incorporated herein. 14.&15. Accepted. Accepted and incorporated herein. Accepted and incorporated herein. 18.-21. Accepted. Not a Finding of Fact but merely a restatement of the testimony. Accepted and incorporated herein. Accepted and incorporated herein. &26. Accepted and incorporated herein. Accepted. &29. Not a Finding of Fact but argument and a restatement of testimony. Not a Finding of Fact but argument. Not a Finding of Fact but a comment on the evidence. Accepted. Recitation of the witnesses testimony is accurate, but the conclusion drawn does not necessarily follow. Frequency of use does not necesarily determine the finality of the policy. Not a Finding of Fact but a comment on the evidence. Accepted as a presentation of the contents of the document. Accepted. Accepted as represented. 38.-40. Accepted and incorporated herein. 41. Accepted as a restatement of testimony. 42.&43. Accepted. Accepted. &46. Accepted. Accepted. Accepted. FOR THE RESPONDENT: 1.&2. Accepted and incorporated herein. 3. Accepted. 4.-6. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and incorporated herein. COPIES FURNISHED: Richard A. Patterson, Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive - Suite 103 Tallahassee, Florida 32308 Jeffery A. Boone, Esquire Post Office Box 1596 Venice, Florida 34284 Linda K. HarSris General Counsel DHRS 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 Sam Power Agency Clerk DHRS 1323 Winewood Blvd. Tallahassee, Florida 32399-0700
The Issue The issue is whether Respondent properly changed Petitioner's licensure status to conditional on June 23, 1997.
Findings Of Fact Petitioner owns and operates a nursing home in Venice, Florida. Respondent conducted a relicensure survey of Petitioner's nursing home on June 12, 1997. On June 23, 1997, Respondent issued Petitioner a new license, effective June 12, 1997, through October 31, 1997, for a skilled nursing facility. However, as a result of the deficiencies found in this survey, Respondent rated the renewal license as conditional. A resurvey on August 6, 1997, revealed that Petitioner had corrected all of the cited deficiencies, so Respondent issued a standard license, effective August 6. There are three ratings for a license: superior, standard, and conditional. Prior to the June 12 renewal, Petitioner's license was rated superior. The issuance of a conditional license adversely affects a licensee in one and possibly two ways. First, the conditional license hinders marketing and employee recruiting and retention. Second, the conditional license may affect Medicaid reimbursement levels. Even though Respondent rerated the nursing home as standard, the earlier conditional rating remains meaningful because it means that Petitioner cannot gain a superior rating for the next licensing period. Another factor militating against a determination that the present proceeding is moot is Respondent's procedure by which it does not provide licensees with an opportunity for a hearing prior to changing the rating of their nursing home licenses. As an incidental complaint to the issuance of a conditional license, Petitioner also complains of the procedure by which this Respondent issues this conditional license. Without having given Petitioner an opportunity for a hearing based on a proposed or tentative decision to change Petitioner's rating, Respondent simply issued the conditional license and gave Petitioner an opportunity to challenge this action, after the fact, in a formal administrative hearing. A mootness determination on these facts would insulate Respondent's initial action from effective challenge, despite the obvious economic impacts of the initial action. The June 12 survey reports cites three sets of Class II deficiencies, which were identified as Tags F 225, F 309, and F 314. These three tags were the sole bases for the issuance of a Conditional license. Tag F 225 concerns the investigation and documentation of an alleged incident of abuse of a resident by one of Petitioner's employees. The survey report asserts that Petitioner did not satisfy applicable legal requirements by failing, in violation of its own policies, to document in the resident's file the results of an abuse investigation report. Tag F 225 and the testimony of Respondent's witnesses at the hearing are vague as to whether the issue under Tag F 225 is that Petitioner failed to conduct an appropriate investigation or failed to document adequately that it had conducted an investigation. When pressed, Respondent's witnesses chose failure to document, perhaps in deference to the fact that Petitioner's employees clearly conducted an investigation. The alleged incident underlying this issue did not constitute abuse. A staffperson grabbed a resident's arm for an appropriate purpose and did not injure or harm the resident. Petitioner's investigation properly concluded that there was no abuse. As discussed under the conclusions of law, the subsubsubparagraph of the federal regulation allegedly violated under this tag requires only that Petitioner report to appropriate authorities any knowledge of actions by a "court of law" against an employee suggestive of unfitness to serve as facility staff. There is no proof of action by a court of law; this missing fact alone ends the inquiry under this tag. Additionally, Petitioner nonetheless reported the unfounded allegations to the state agency charged with investigating allegations of abuse, and the state agency concluded that the charge was unfounded. Tag F 309 concerns the quality of care received by six residents. As to Resident Number 6, who was in the final stages of a terminal illness, the survey report asserts that Petitioner kept him in isolation and did not offer him opportunities for socialization. Testimony at the hearing revealed that the resident was dying and did not want to socialize, but Respondent's witness opined that this was not an appropriate option. No evidence suggested that the dying resident suffered any diminution of ability to eat or use language. Respondent's witness labored under the misconception that the cited federal regulation addresses socialization (as opposed perhaps to the role of socialization in facilitating the more specific activities actually mentioned by the regulation, which is discussed in the conclusions of law). Even if the federal regulation were so broad, which it is not, the evidence certainly suggests that any diminution in socialization was unavoidable due to the resident's terminal clinical condition. The evidence reveals that Resident Number 6, who had had a gangrenous foot, suffered a staph infection of his gangrenous right foot. He was depressed, fatigued, and in pain; however, he was freely visited by staff and family. As to Resident Number 8, who had had a stroke, the survey report asserts that Petitioner failed to provide him his restorative therapy of walking and failed to document this therapy. At the time of the survey, Petitioner was short of restorative staff due to a scheduled vacation and an unscheduled bereavement absence due to the suicide of an employee's brother. When a restorative aide, who was on vacation, appeared at the nursing home and attempted to provide Respondent's surveyor with documentation concerning the therapy administered to Resident Number 8, the surveyor rejected the documentation on the grounds that it did not sufficiently identify the resident or therapist. Resident Number 8 suffered some loss of functioning--i.e., the ability to walk 400 feet--but the record does not link this loss of functioning to any brief interruption in his restorative therapy. As to Resident Number 9, the survey report states that, during the two days that surveyors were at the facility, she did not ambulate, even though her restorative nursing plan called for daily ambulation. However, she suffered no harm during this insignificant interruption in her program, from which she was successfully discharged a couple of weeks after the survey. As to Resident Number 13, who was 102 years old, the survey report notes that he was supposed to ambulate in a wheelchair. One of Respondent's surveyors noticed that a staffperson was pushing this resident's wheelchair. However, staff had assumed the responsibility of pushing this resident's wheelchair for him after he had developed pressure sores on his heels. The evidence fails to show that Petitioner's care for the treatment of Resident Number 13 had anything to do with his loss of function. As to Resident Number 26, the survey report asserts that his physician had ordered an increase in dosage of Prilosec, which aids digestion by treating the acidity associated with peptic ulcers. Three weeks passed before Petitioner's staff noticed that the change, which was on the resident's chart, had not yet been implemented. They implemented the change prior to the survey, and notified the resident's physician of the error in medication administration a couple of days later. The survey report states that Petitioner's staff documented, on May 30, 1997, that Resident Number 26 had lost 4.8 pounds, or 5.7 percent of his body weight, in one week. This weight loss occurred during the latter part of the period during which Resident Number 26 was receiving less than his prescribed amount of medication. Two of Petitioner's witnesses testified, without elaboration, that the medication error did not cause the weight loss. The survey report implies otherwise, although Respondent's witnesses were not as pronounced as Petitioner's witnesses in dealing with any link between the medication error and the weight loss. Absent the weight loss, the medication error-- consisting of a failure to raise a digestive medication--would have been insignificant and insufficient grounds for a Class II deficiency on the cited basis. However, there was a serious weight loss while the resident was undermedicated. The lack of evidence in the record proving that there was or was not a causal link between the weight loss and undermedication means that the party bearing the risk of nonpersuasion loses on this issue. As discussed in the conclusions of law, Respondent has the burden of proof; thus, for this reason alone, Petitioner prevails on this issue. As to the last resident under Tag F 309, who was not identified, the survey asserts that a restorative aide commented that he used to walk 440 feet, but does not anymore because he thinks that he does not have to. This scanty allegation provides no basis for citing Petitioner with a deficiency, even if it applies to Resident Number 8, as appears probable. Tag F 314 also concerns a quality-of-care issue-- specifically, the development and treatment of pressure sores in three residents. As to Resident Number 1, who had been in the nursing home for three years, the survey report states that, on May 12, 1997, he had developed a Stage II pressure sore on his right outer ankle. The survey report asserts that Petitioner failed to provide sufficient care to prevent the development of this pressure sore, that Resident Number 1 had suffered pressure sores in 1995, and that Petitioner should have known and treated Resident Number 1 on the basis of his being at risk for developing pressure sores. Despite a failure to document, Petitioner's staff adequately treated Resident Number 1 once the pressure sore developed. Nursing assistants required that he wear silicone pressure booties and that lotion be rubbed on the irritated skin. In addition, Petitioner has shown that the clinical condition of Resident Number 1 made pressure sores unavoidable. One of Petitioner's Assistant Directors of Nursing testified that Resident Number 1 had poor pedal pulses, indicative of poor circulation, and a history of peripheral neuropathy. The resulting decreased sensation in his feet would prevent him from feeling increased pressure and thus the need to move his feet. Despite preventative measures, Resident Number 1 developed pressure sores due to these clinical conditions. As to Resident Number 7, who had been in the nursing home for six years, the survey report asserts that she had a Stage II pressure sore--meaning that the skin was broken--but was allowed to remained seated in the same position for two hours in a position in which the pressure on the sore on her buttock was not relieved. The survey report does not allege that this pressure sore developed while Resident Number 7 resided in the nursing home. Resident Number 7 had severe dementia and was a total-care patient. She could not move independently. In fact, she sat, unmoved, in a chair for at least 4 and 3/4 hours on one of the days of the survey. The failure to move Resident Number 7 raises serious questions about the adequacy of Petitioner's treatment. However, Petitioner's Assistant Director of Nursing answered these questions when she testified that the one- centimeter pressure sore healed five days after the survey. Thus, Petitioner provided Resident Number 7 with the necessary treatment and services to promote healing. As to Resident Number 13, who had been in the nursing home for less than three months, the survey report alleges that he had developed pressure sores while in the nursing home. Resident Number 13 was the 102-year-old resident who is also discussed in Tag F 309. The survey report alleges that, on April 24, 1997, Resident Number 13 had a red left heel, red right foot, and pink right heel; on May 1, 1997, he had soft and red heels; on May 7 and 14, 1997, his pressure sores could not be staged due to dead tissue surrounding the sores; on May 20, 1997, his left heel was documented as a Stage II pressure sore, but the right heel could not be staged due to dead tissue; and Petitioner's staff did not implement any treatment until May 12, 1997. Respondent proved the allegations cited in the preceding paragraph except for the last concerning a failure to implement any treatment until May 12. Petitioner's Assistant Director of Nursing testified that Patient Number 13 was frail and debilitated. If this is a clinical condition, it is the only statement of Patient Number 13's clinical condition contained in the record. The Assistant Director of Nursing testified that the pressure sore on the left heel healed by June 3 after the usual treatment measures of turning and repositioning and heel protectors. She testified that the pressure sore on the right heel improved somewhat, but had not healed by the time of his death in January 1998 of presumably unrelated causes. The testimony of the Assistant Director of Nursing rebuts any evidence concerning inadequate treatment of Resident Number 13, but does not establish that the development of his pressure sores was clinically unavoidable. Her testimony as to Resident Number 1 identified clinical conditions that, when coupled with the early implementation of preventative measures, established that Resident Number 1's pressure sore was unavoidable. As to Resident Number 13, the Assistant Director of Nursing also testified of early implementation of preventative measures, but, in contrast to her testimony concerning Resident Number 1, she described little, if anything, of any clinical condition making the pressure sores unavoidable. If the intent of the Assistant Director of Nursing was to imply that old age coupled with frailty and debilitation provide the necessary clinical justification, she failed to establish the necessary causal relationships among pressure sores, advanced age, and frailty and debilitation-- even if the frailty and debilitation were relative to other 102-year-olds, which the record does not reveal, as opposed to the frailty and debilitation, relative to the general population, that one might expect in a 102-year-old. Without more detailed evidence concerning Resident Number 13's clinical condition, Petitioner effectively invites the creation of a safe harbor from liability for the development of pressure sores in 102-year-olds or even 102-year-olds who are frail and debilitated for their age, and the administrative law judge declines either invitation.
Recommendation It is RECOMMENDED that the Agency for Health Care Administration enter a final order dismissing the petition filed by Petitioner and rating Petitioner's license as conditional for the relevant period. DONE AND ENTERED this 7th day of July, 1998, in Tallahassee, Leon County, Florida. ROBERT E. MEALE 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 Filed with the Clerk of the Division of Administrative Hearings this 7th day of July, 1998. COPIES FURNISHED: Donna H. Stinson Broad and Cassell Post Office Drawer 11300 Tallahassee, Florida 32302-1300 Karel Baarslag Agency for Health Care Administration State Regional Service Center 2295 Victoria Avenue Fort Myers, Florida 33901 Paul J. Martin, General Counsel Agency for Health Care Administration Post Office Box 14229 Tallahassee, Florida 32317-4229 Sam Power, Agency Clerk Agency for Health Care Administration Post Office Box 14229 Tallahassee, Florida 32317-4229 Douglas M. Cook, Director Agency for Health Care Administration Post Office Box 14229 Tallahassee, Florida 32317-4229
The Issue The issue for consideration in this case is whether Respondent’s license as a registered nurse in Florida should be disciplined because of the matters alleged in the Administrative Complaint filed herein.
Findings Of Fact At all times pertinent to the issues herein, Petitioner, Board of Nursing, was the state agency responsible for the licensing of nurses and the regulation of the nursing profession in Florida. Respondent, Drema G. M. Servoss, was licensed as a registered nurse holding license number 1918522. Ms. Servoss holds both an Associate and a Bachelor’s degree in Nursing from the University of Tampa, and is currently completing work on a Master’s degree in family nurse practice, also from the University of Tampa. For several years, she worked weekends at University General Hospital (University), in Tampa, in special care nursing. When she started back to school to earn her Master’s degree, in September 1995, she transferred to the home care unit at University, then identified as Community Home Care Professionals, (CHCP). For the one year leading up to the job change that led to the incident in question, Ms. Servoss worked at CHCP as the weekend scheduler of home health personnel, but made no home visits herself. Finally, because she had worked every weekend for the preceding five years, and wanted to spend more time with her family, and since the remaining classes she needed for her Master’s degree were offered primarily at night, she applied for a weekday field nurse position. She was selected for the position. Though the normal orientation period for new home health nurses normally lasted for approximately two weeks, depending on staffing needs, a part of which included a preceptorship, Ms. Servoss was provided with only four days of orientation, of which two days consisted of following another nurse around. On the Friday before Labor Day, 1996, she was given an assignment of six patients to see starting on Monday, September 2, 1996, which was Labor Day. However, on the Sunday evening preceding Labor Day, when she returned from a weekend trip, Respondent found a message waiting on her answering machine advising her of three more patients to be added to her list. Feeling that nine patients were too many for a new home health nurse, she attempted to contact Ms. Tisdale, her supervisor, to inform her of that and to also advise that Respondent’s husband, Christopher, also a registered nurse and a part-time home health nurse for CHCP, might see some of the nine patients on Labor Day. Ms. Servoss also tried to reach Ms. Watkins, the weekend scheduler, but neither could be reached. Respondent left word for Ms. Watkins to please call her back, but she did not do so, and Watkins did not have a pager through which she could be reached. Respondent’s first patient on September 2, 1997, was P.W., who was to receive medication through an IV medport three times a day. Respondent’s visit was scheduled for 7:00 a.m., and the visit included changing the needle in the medport. She did not know how to do this, so she called her husband at home. He worked as a nurse on an intensive care unit and had all the skills required to see the patient received the care she needed. When he arrived at P.W.’s home, Christopher showed Respondent how to do the medport access, which she did, and while she performed the treatment required, he filled out the nursing notes. It was not unusual for this division of labor to take place. Respondent had done it before during her orientation when following Ms. Tisdale. After completing the required treatment on P.W., Respondent assigned her husband several other of her patients to see. She then went to the company office to talk with the supervisor on duty, but it was closed for the holiday. This was a change from previous practice prior to the buyout of the company by Columbia Health Care System. Prior to that, it was company policy to have the office open on holidays. Finding the office closed, she thought about what to do for a while. Mindful of the warning she had received to stay within the boundaries permitted a field nurse and not to act as a supervisor, she decided to visit those patients on her list which she had assigned to her husband. At each of the three patients’ homes, Respondent explained that she was the regular nurse who should have come to see them that day, and that the male nurse who had previously been there, though a nurse, was not the assigned nurse. She assured each patient that they would not be double-billed, but did not leave a second copy of the nursing clinical notes signed by her as required. Aside from B.K., who objected to being seen by a male nurse because of the nature of her problem, none complained about being seen by Christopher or that Respondent made a second visit that day. Petitioner contends that Respondent did not make the visits as she claims, and in support of that position, presented the testimony of B.K. who did not recall Respondent’s being at her home that day. None of the other three patients in issue were present to testify nor were they deposed. In addition, the record of client/family teaching, left with each patient and reflecting the date and subject of each visit, and by whom it was made, which was left with B.K. for the period August 31 through October 14, 1996, fails to reflect a visit by Respondent or any other nurse. By the same token, however, it does not reflect a visit each day, and there is an extended and unexplained hiatus between September 25, 1996 and October 14, 1996. For this reason, it is not given much probative weight. In addition, Respondent described what she said were the residences of each of the patients in issue, and no evidence was submitted by Petitioner to dispute this, save the testimony of B.K. Based on the state of the evidence, it is found that she made the repeat visits as claimed. That evening, after completing all nine visits, Respondent completed the paperwork for the visits she had made on Labor Day, including those patients previously seen by Christopher. In doing so, she utilized the information contained on Christopher’s copies of the unsigned nursing clinical notes, the yellow copies of which he had, as required, left at the house. She supplemented that information with her own memory. Two days later, on September 4, 1996, as Respondent was getting ready to leave for the day, she was paged by Joyce Kovacs, the clinical home care supervisor, who took her to the office of the director of professional services, Ms. Bilgutay. There, Respondent was accused of assigning patients to her husband, which was out of her area of authority. She was also accused of not making any of those visits, and was informed right away that she was fired. Because she was afraid her husband would leave his job in protest over her treatment, she initially did not indicate she had also made the visits. She was humiliated by the way she was treated, and in order to get out of the room as quickly as possible, she did not strenuously contest what her accusers said. During that encounter, nothing was said to her about her signing the nursing notes allegedly prepared by her husband. Later, however, she was again called in and asked to reimburse the company for the tuition assistance she had previously received because, it was alleged, she had fraudulently signed the notes. She was also threatened that the matter might be referred to the Board of Nursing. It was. Several months later Respondent was interviewed by David Berry, an investigator for the Agency for Health Care Administration. During this interview, the investigator would not release to Respondent the names and addresses of the patients in issue. She, therefore, requested he visit the patients and refresh their memories regarding her subsequent visit. During the course of his investigation, on February 21, 1997, in excess of five months after the date in issue, Mr. Berry spoke with three of the four patients to whom the allegations herein relate. All are elderly. Though two of them, including B.W., professed to remember that only a male nurse came to see them on September 2, 1996, neither could identify Christopher from the photograph presented. The third could remember very little of the incident. Only B.W. was present to testify. D.D. could not remember much of the incident, and S.W. declined to appear voluntarily at the hearing. He claimed he was too elderly, and, besides, the day was scheduled for his golfing.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Board of Nursing enter a Final Order finding Respondent not guilty of the misconduct alleged and dismissing the Administrative Complaint in this matter. DONE AND ENTERED this 2nd day of February, 1998, in Tallahassee, Leon County, Florida. ARNOLD H. POLLOCK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6947 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of February, 1998. COPIES FURNISHED: Craig A. McCarthy, Esquire Agency for Health Care Administration Post Office Box 14229 Tallahassee, Florida 32317-4229 Cynthia A. Mikos, Esquire A. S. Weekley, Jr., Esquire Holland & Knight 510 Vonderburg Drive Brandon, Florida 33511 Angela T. Hall, Agency Clerk Department of Health 1317 Winewood Boulevard Building 6 Tallahassee, Florida 32399-0700 Pete Peterson, General Counsel Department of Health 1317 Winewod Boulevard Building 6, Room 102-E Tallahassee, Florida 32399-0700 Marylin Bloss Executive Director Board of Nursing 4080 Woodcock Drive Suite 202 Jacksonville, Florida 32207
The Issue The issues are whether Respondent violated Section 464.018(1)(h), Florida Statutes, and Rules 64B9-8.005(2) and 64B9-8.005(12), Florida Administrative Code, and if so, what penalty should be imposed.
Findings Of Fact Petitioner is the agency charged with the regulatory and prosecutorial duties related to nursing practice in Florida. Respondent is a licensed practical nurse in Florida, holding license no. PN 0481631. From May 13, 1992, to April 11, 1997, she was employed by Southlake Nursing and Rehabilitation Center (Southlake). On April 9, 1997, Respondent worked as a nurse on the 3:00 p.m. to 11:00 p.m. shift on Southlake's A wing. T.C. was a patient of another nurse on that wing. Around 7:00 p.m., Respondent began administering medications to her patients. Melody Perez, the ward clerk, informed Respondent that T.C. needed assistance because he was in respiratory distress. T.C. was sitting in the hall, six to eight feet from Respondent. Respondent went over to T.C., checked to make sure that there was oxygen in his tank and that his nasal cannula was in place. Respondent saw no outward symptoms of T.C. being in acute respiratory distress such as rapid breathing or anxiety. Respondent told Ms. Perez that she could not help T.C. because he was not her patient. She told T.C. that his nurse, who was on break and had the keys to the other medication cart, would be back in a few minutes. Respondent thought that T.C. just wanted his medications. She did not perform a nursing assessment, as that term is commonly understood in the practice of nursing. She did not take T.C.'s vital signs, count his respirations, or listen to his chest. After telling him to wait for his nurse, she just walked away. On April 10, 1997, T.C. and another resident complained to Southlake's administrative staff about Respondent's failure to help T.C. Southlake initiated an investigation based on these complaints. Conchita Griffin, Southlake's Assistant Director of Nursing, conducted the investigation. As was the custom and procedure at Southlake, Ms. Griffin interviewed T.C., the second complaining resident, Ms. Perez, and two certified nursing assistants (CNAs) who were on duty during the incident. Ms. Griffin then compiled a written report of the incident and submitted it to Southlake's administration. Based on her investigation, and after considering Respondent's disciplinary history at Southlake, Ms. Griffin recommended that Southlake terminate Respondent. Southlake had written policies requiring a nurse to attend to any resident who needed help. The policies require a nurse to assess a patient complaining of respiratory distress by taking the patient's vital signs, listening to respirations and to the chest for congestion. According to the policies, a nurse should attend to any patient in distress, calling the patient's assigned nurse, facility management, or 911 if needed. There are no circumstances where the nurse should do nothing. On April 11, 1997, Respondent was called in and asked about her side of the incident. She admitted that she looked at T.C. and that he did not appear to be in distress. She acknowledged that she did nothing except tell T.C. that his nurse would be back soon. When informed that she was being terminated, Respondent refused to sign the disciplinary form. She was asked to leave the premises immediately. Sharon Wards-Brown, Southlake's nursing supervisor for the evening shift in question, accompanied Respondent to A wing to retrieve her belongings. When Respondent arrived on the A wing, she went into the medication room, picked up T.C.'s chart, removed some pages from the chart, and went to the fax machine just outside the medication room. Ms. Wards-Brown and Beverly Burstell, the nurse manager who was on the floor checking some charts, saw Respondent remove the pages from T.C.'s chart and go to the fax machine. Both of them told Respondent that she could not remove or copy anything from the resident's chart. Respondent told Ms. Wards-Brown and Ms. Burstell not to touch her. Each page of nurses' notes in the patients' charts have a front and back side. Respondent stood at the fax machine for only a couple of seconds, not long enough to copy both sides of one page of nurses' notes. She certainly did not have time to copy both sides of all of the pages that she had removed from T.C.'s chart. Respondent's testimony that she had time to copy some of the nurses' notes from T.C.'s chart is not persuasive. Her testimony that she left all of the original pages in the fax machine is not credible. After being prevented from copying all of the pages that she had removed from T.C.'s chart, Respondent ran into the bathroom. A few seconds later she came out of the bathroom with papers and her purse in her hand. Ms. Wards-Brown called Clara Corcoran, Southlake's administrator, and Ms. Griffen for assistance. All three of them followed Respondent out of the building, demanding that she return the documents that she had removed from T.C.'s chart. Respondent repeatedly told them not to touch her. Ms. Corcoran and Ms. Griffen followed Respondent into the parking lot. Respondent got in her car but Ms. Corcoran and Ms. Griffen blocked Respondent from closing the car door and continued to demand the return of the papers. Respondent finally drove forward over the cement bumper and the grass in order to leave with the papers. Meanwhile, Ms. Wards-Brown returned to the A wing to examine T.C.'s chart. Ms. Griffen also examined the chart within two to three minutes after Respondent left the floor. The chart was still open on the desk. Ms. Wards-Brown and Ms. Griffen discovered that T.C.'s nurses' notes for April 9, 1997, were missing. They knew the notes were missing because both of them had seen the notes in the chart the day before when they reviewed the chart as part of the investigation. Respondent's Exhibit 2 is a copy of the front and back of one page of T.C.'s nurses' notes. The last note is dated March 27, 1997. It is not plausible that T.C.'s chart had no nurses' notes from that time until after April 10, 1997. Even if Respondent did not remove any of T.C.'s original nurses' notes from the premises, she violated the acceptable standards of nursing care by copying the front and back of one page and removing the copies from the facility.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED: That Petitioner enter a final order fining Respondent $1,000 and suspending her license for one year, followed by two years of probation with appropriate conditions. DONE AND ENTERED this 10th day of October, 2000, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD 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 10th day of October, 2000. COPIES FURNISHED: Diane K. Kiesling, Esquire Agency for Health Care Administration 2727 Mahan Drive Building 3, Room 3231A Tallahassee, Florida 32308 Thomas A. Delegal, III, Esquire Randy Rogers, Esquire Delegal & Merritt, P.A. 424 East Monroe Street Jacksonville, Florida 32202-2837 Ruth R. Stiehl, Ph.D., R.N. Executive Director Board of Nursing Department of Health 4080 Woodcock Drive, Suite 202 Jacksonville, Florida 32207-2714 Theodore M. Henderson, Agency Clerk Department of Health 4052 Bald Cypress Way, Bin A00 Tallahassee, Florida 32399-1701 William W. Large, General Counsel Department of Health 4042 Bald Cypress Way, Bin A02 Tallahassee, Florida 32399-1701
