09-000696CON Punta Gorda Hma, Llc, D/B/A Charlotte Regional Medical Center vs. Agency For Health Care Administration And The Pavilion At Healthpark, Llc Status: Closed Recommended Order on Friday, October 16, 2009.

Summary: Special circumstances exist in a unique county that make the approval of the psychiatric hospital appropriate.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PUNTA GORDA HMA, LLC, d/b/a )

CHARLOTTE REGIONAL MEDICAL )

CENTER, )

)

Petitioner, )

)

vs. ) Case No. 09-0696CON

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION AND THE PAVILION )

AT HEALTHPARK, LLC, )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative

Hearings, by its designated Administrative Law Judge, J.D.

Parrish, held a final hearing in the above-styled case on

June 2-15, 2009, in Tallahassee, Florida.

APPEARANCES

For Petitioner Punta Gorda HMA, LLC d/b/a Charlotte

Regional Medical Center:

Geoffrey D. Smith, Esquire

Susan C. Smith, Esquire

Smith & Associates

2873 Remington Green Circle

Tallahassee, Florida 32308

For Respondent Agency for Health Care Administration:

Lorraine Novak, Esquire

Agency for Health Care Administration

Office of the General Counsel

2727 Mahan Drive, Suite 3431

Fort Knox Building 3, Mail Station 3

Tallahassee, Florida 32308

For Respondent The Pavilion at Healthpark, LLC:

Cynthia Tunnicliff, Esquire

Brian Newman, Esquire

Brandice D. Dickson, Esquire

Pennington, Moore, Wilkinson,

Bell & Dunbar, P.A.

215 South Monroe Street, Second Floor

Tallahassee, Florida 32301

STATEMENT OF THE ISSUE

Whether CON application No. 10034, for a new psychiatric

hospital to be constructed in Agency for Health Care

Administration Health Planning District 8, should be approved.

PRELIMINARY STATEMENT

Petitioner, Punta Gorda HMA, LLC d/b/a Charlotte Regional

Medical Center (Petitioner or Charlotte), has challenged the

preliminary approval of Certificate of Need (CON) Application

No. 10034 (the application). The application at issue was filed

by Respondent, The Pavilion at HealthPark, LLC (The Pavilion),

on or about September 10, 2008. The Pavilion seeks to construct

a new psychiatric hospital in Lee County, Florida (AHCA Health

Planning District 8). Its CON application was reviewed and

preliminarily approved by Respondent, Agency for Health Care

Administration (AHCA or the Agency). AHCA issued its State

Agency Action Report (SAAR) granting preliminary approval for

the new hospital on December 11, 2008. The SAAR outlined AHCA's

reasons and explanations for the approval.

Section 408.039, Florida Statutes (2009), details the

review process by which this case is governed. The Florida

Legislature has directed AHCA, by rule, to provide for CON

applications to be submitted on a timetable or cycle basis.

Applications should be reviewed timely and applications

pertaining to similar types of services or facilities are to be

comparatively considered in relation to each other. In this

case, however, the Pavilion is the sole competitor for the

facility sought. The approval of the CON application is opposed

by Petitioner who is an existing provider within the same AHCA

health planning district. Charlotte timely filed its petition

to oppose the new psychiatric hospital proposed by the Pavilion.

The case was forwarded to the Division of Administrative

Hearings (DOAH) to conduct formal proceedings in connection with

the dispute. In accordance with the dates proposed by counsel

for the parties, the case was scheduled for hearing as stated

above.

As presented in the parties' Pre-hearing Stipulation, the

statutory criteria applicable to this proceeding are found in

Chapter 408, Florida Statutes; Florida Administrative Code

Chapter 59C-1; Chapter 394, Florida Statutes; and Chapter 395,

Florida Statutes ( see paragraph 6 of Pre-hearing Stipulation

filed June 2, 2009). Section 408.035, Florida Statutes (2009),

sets forth the CON review criteria.

The parties have stipulated that a timely and complete

letter of intent, CON application, and omissions response were

filed by the Pavilion. Further, the parties agreed that

Charlotte timely filed a petition to challenge the preliminary

approval of the CON application at issue.

At the final hearing, the Pavilion presented the testimony

of the following witnesses: David Winters; James Harper; Jim

Nathan; Sally Jackson; Michael Metcalf; Ted Sottong; David

Mulholland; Darryl Weiner; Ivan Mazzorana, and Sharon Gordon-

Girvin. The deposition testimonies of Stanley Appelbaum; Sandra

Dzielawa; Elizabeth Givens; Steven Machlin; Carmen Miletti;

Angela Monterosso; Casey Moore; Chris Nesheim; Elton Scott, and

Scott Waltz were received in evidence for the Pavilion.

Additionally, the Pavilion's Exhibits numbered 1, 2, 2a, 4, 5,

7, 10, 12, 16 through 23, 25, 25A, 26, 26A, 32-34, 38, 40, 45,

47, 49, 50 through 52, 58, 61 through 63, 66, 68, 70, 83, 84-1,

84-2, and 84-3 were entered into evidence.

The Agency presented the testimony of Jeffrey N. Gregg,

Bureau Chief of Health Facility Regulation, who was accepted as

an expert in health planning and CON review. AHCA Exhibits

numbered 1 through 7 were received in evidence.

Petitioner presented the testimony of Patricia Greenberg;

Bradley Kevin Nurkin; Emil Dameff; Joshua Putter; Martha

Lenderman, and Kerry Blind. Petitioner's Exhibits numbered 1,

2-1, 2-12, 2-14 through 2-21, 2-23 through 2-39, 2-42 through

2-44, 2-46 through 2-79, 3 through 9, 14, 16, 17, 20, 21 through

29, 32, 33, 36, 37, 39, 40, 43, 44, 62, 66, 75 through 112, 161,

and 168 through 172 were accepted into evidence.

The 16-volume Transcript of the final hearing was filed

with the Division of Administrative Hearings on July 21, 2009.

The parties timely filed their Proposed Recommended Orders on

July 31, 2009. The Proposed Recommended Orders have been fully

considered in the preparation of this Recommended Order.

FINDINGS OF FACT

The Parties

1. AHCA is the state agency charged with the responsibility

of administering the CON program for the state of Florida. The

Agency serves as the state heath planning entity. See § 408.034,

Fla. Stat. (2009). As such, it was charged to review the CON

application at issue in this proceeding. AHCA has preliminarily

approved the Pavilion's CON application

No. 10034.

2. Petitioner is an existing provider who opposes the

approval of the subject CON. Petitioner is a subsidiary of

Health Management Associates (HMA). It owns and operates a

208-bed hospital located in Punta Gorda, Florida. Petitioner's

site is part of AHCA Health Planning District 8 and is located in

Charlotte County, Florida. Petitioner has demonstrated a history

of providing quality care in the programs and services it offers,

including psychiatric services.

3. Petitioner offers its psychiatric services in a separate

unit located across the street from its main acute care facility.

This behavioral health unit, called Riverside Behavioral Health

or Riverside in the record, is a 52-bed unit licensed as part of

the general acute care hospital operated by Petitioner. At the

time of the hearing, Riverside was licensed for 42 adult

psychiatric beds and 10 adult substance abuse beds. Patients at

Riverside requiring acute care hospital services or care are

easily transported from the Riverside campus across the street to

the main hospital facility.

4. The Pavilion seeks approval of a CON in order to

construct and operate a new psychiatric hospital to be located in

AHCA Health Planning District 8. The new entity would be located

in Lee County, Florida.

5. The Pavilion is a new entity founded by James Harper and

Dan Page. These men have many years of experience in developing

and operating psychiatric healthcare facilities. In order to

fund their venture, Harper and Page have joined forces with three

principal investors: Rogers Wells, Gary Bell, and Michael

Metcalf. This trio of experienced business individuals formed

American Healthcare Holdings, LLC (AHH), with Harper and Page.

For convenience sake, Harper and Page (the experienced side of

the venture) own JHDP Holdings, LLC, which in turn owns 40% of

AHH; Wells, Bell, and Metcalf (the finance side of the venture)

own Behavioral Health Company, LLC, which in turn owns 60% of

AHH. All together, AHH is well-positioned to fund, complete and

operate the proposed project.

The Proposed Project

6. The Pavilion seeks to construct a new 76 bed inpatient

psychiatric hospital to be located in the existing HealthPark

Florida campus in Fort Myers, Florida. This location is

approximately 1,500 feet from an existing acute care hospital

operated by Lee Memorial Health System. The acute care

hospital, HealthPark Medical Center, would provide support

services and programs for the proposed psychiatric hospital. In

fact, Lee Memorial Health System supports the proposed project.

7. The HealthPark Florida campus is located within a

development of regional impact (DRI) that is governed by local

and state regulations pertaining to such entities. The DRI

terms for the HealthPark Florida site were amended in

September 2008 to allow for a specialty hospital. As a result,

the proposed project would come within the allowable DRI uses.

8. The proposed project will feature four units of 19 beds

each. The rooms will be private and will be located above the

first level. No patient care will be provided on the ground

floor. The configuration of the structure will allow for

security and entryways that consider patient safety and

convenience. The Pavilion proposes to be a Baker Act receiving

facility for AHCA Health Planning District 8 and the

architecture of the proposed project should readily allow for

that intended use.

9. The proposed project will comply with all applicable

building codes and will address the 100-year floodplain and

hurricane category 3 surge inundation zone considerations as

required by law. If utilities and patient care facilities are

located above the ground floor, any concerns regarding

floodplain or inundation issues should be appropriately

addressed. The Pavilion has agreed to meet these architectural

considerations.

10. The existing acute care hospital nearby has been able

to address similar floodplain and inundation concerns without

concern from AHCA. Similarly, it is anticipated that the

proposed project will be able to address any AHCA concerns in

this regard.

11. The size of the parcel is adequate to construct the

proposed psychiatric hospital.

12. As previously stated, the proposed project is located

in AHCA Health Planning District 8. That district comprises

Sarasota, Lee, Collier, Glades and Hendry Counties. The

proposed site is within the largest of those counties

(population-wise). Of the 1,568,462 persons in AHCA Health

Planning District 8, Lee County had 608,182 residents in 2008.

13. In reaching its decision to seek the approval of the

new psychiatric hospital, the Pavilion considered input from many

sources, including, but not limited to: physicians who practice

in Lee County; experts who deal with the needs of the mental

health community in Lee County; the vicinity of the proposed

psychiatric hospital and its access to acute care services at the

nearby hospital; experts in health care planning and finance; and

various persons from the public who vocally and enthusiastically

supported the proposed project. According to AHCA personnel, the

community support for the proposed project has been unparalleled

in recent history for any new psychiatric hospital.

History and Current Providers

12. AHCA Health Planning District 8 has a number of

providers who have attempted to meet the psychiatric needs of

the community.

13. Historically, there were two additional hospitals that

had provided psychiatric services to Lee County and AHCA Health

Planning District 8 that are no longer available to address

inpatient needs. One, a state hospital, closed when the State

of Florida elected to abandon the facility. The second, known

as "Charter" in the record, closed when the parent company

failed financially. Since the closure of the two psychiatric

hospitals, local health care professionals have had to muster

assistance and support from day programs and crisis services to

carry the bulk of the weight of providing psychiatric services

to Lee County residents. Extended wait times for residential

placements may be common. Moreover, the admission of

psychiatric patients to acute care hospitals for stabilization

and care is also common.

14. As of the time of hearing, the breakdown of

psychiatric beds in AHCA Health Planning District 8 was as

follows: in Sarasota County, Sarasota Memorial Hospital

operated a 49-bed adult inpatient psychiatric unit; in Charlotte

County, the Riverside facility operated as previously described;

and in Collier County, there were two facilities, a 23-bed adult

inpatient psychiatric unit located at Naples Community Hospital

and a facility called "The Willough," a 42-bed freestanding

inpatient psychiatric hospital. Although technically Lee

Memorial Hospital recently opened a 15-bed psychiatric unit in

Lee County, it opened as an accommodation to the Pavilion and

will close once the proposed project comes on line to provide

services.

15. Finally, as it relates to existing providers, it is

important to note the role of Lee Mental Health in connection

with existing providers. Lee Mental Health is the only Baker

Act receiving facility in the county. It has two campuses and

operates a 30-bed adult crisis stabilization unit (CSU). The

CSU is operated to stabilize patients who are a danger to

themselves or others, to assist with patient medication

management, and to facilitate discharge planning for those who

are going to transition to outpatient programs. Lee Mental

Health and the CSU seek to coordinate outpatient services and

programs to enhance patient access to those opportunities in a

non-residential setting. The Pavilion is supported by Lee

Mental Health, as it will operate in conjunction with the

county-wide mental health system to emphasize outpatient care.

Baker Act admissions can be processed through the Pavilion

psychiatric hospital, be stabilized, and referred to the

outpatient services Lee Mental Health provides. The Lee County

patients will have a continuum of care at a level and quality

not now available. Further, it is expected that Lee Mental

Health will grow its revenues and programs through a more

efficient use of inpatient admissions and outpatient services.

The CSU was never intended to serve as a long-term admission

facility.

Review Criteria

16. Every new hospital project in Florida must be reviewed

pursuant to the statutory criteria set forth in Section 408.035,

Florida Statutes (2009). Accordingly, the ten subparts of that

provision must be weighed to determine whether or not a proposal

meets the requisite criteria. Subsection 408.035(1)(a), Florida

Statutes (2009), provides that the Agency must review a CON

application and make its determination based upon the need for

health care facilities and health services being proposed.

17. Florida Administrative Code Rule 59C-1.040 sets forth

the criteria related to hospital inpatient general psychiatric

services pertinent to this case. Pursuant to that rule (and the

provisions of Florida Administrative Code Rule 59C-1.008(2)),

AHCA found that there is no fixed bed need for the applicable

planning horizon for AHCA Health Planning District 8. Since

AHCA addresses need on a district basis, the mathematical result

is that under the computations used by the Agency (as described

by the rule), no new psychiatric beds are needed in AHCA Health

Planning District 8. Nevertheless, after reviewing the "not

normal" circumstances presented by The Pavilion, the Agency

submitted its SAAR recommending approval of the instant CON

application.

18. To wade through the "special circumstances" that were

considered material by the Agency requires a look back at the

history of CON review in Florida. Jeffrey Gregg is the Chief of

the Bureau of Health Facilities Regulation, the section that

evaluates CON applications and makes determinations pertinent to

the statute and rules. According to Gregg, since the year 2000,

existing hospitals have been permitted to add beds without going

through the CON review process. Because of this, the numeric

need calculations previously meaningful to determine if beds are

needed in a health planning district are no longer viable or

significant as a measure of whether or not there is a "need" for

additional hospital beds. Gregg opined that although the change

in CON bed addition did not encompass psychiatric hospital beds,

with a few exceptions not related to AHCA Health Planning

District 8, it is generally presumed that the numeric need

methodology will result in no new beds needed. Existing acute

care providers can always add beds to their inventory.

Transitioning added beds to psychiatric use for existing

providers is also an option. Further, as a practical matter,

most beds now approved through the CON process are reviewed and

evaluated via the "special circumstances" route.

19. So the ultimate question becomes: are there truly

"special circumstances" to warrant the approval of the instant

CON application? According to Gregg, the instant CON

application was "one of the easiest decisions for us to make."

Lee County is the most populous county in AHCA Health Planning

District 8, and it has no inpatient psychiatric services. This

is a concern to AHCA; a county as large as Lee County should be

served. According to Gregg, a growing urban population with no

established inpatient psychiatric facility creates a health care

deficit.

20. Additionally, because AHCA Health Planning District 8

as a whole has one of the lowest utilization rates when compared

to the state as a whole suggests that something is amiss. The

trend in psychiatric care is to shift effort to outpatient

treatment options. Nevertheless, it would normally be expected

that the need of the district would be similar to, and not so

disparate with, the rest of the state. The "if you build it,

they will come," mentality is not truly the picture of why

inpatient psychiatric beds are needed. More accurate would be

the fact that the outpatient resources in Lee County (who

support the proposed project) are making a Herculean effort to

address the mental health needs of the community. The approval

of the instant CON will work to alleviate some of the pressures

felt at the local level and will coordinate a continuum of care

not now available.

21. AHCA Health Planning District 8 has the lowest

availability of adult inpatient psychiatric beds in the state.

22. From a health planning perspective, it is likely that

a significant number of patients who would otherwise use adult

inpatient psychiatric beds are currently being served at acute

care hospitals in AHCA Health Planning District 8. The Pavilion

documented many instances in which patients treated with

psychosis and other mental disease disorders were discharged

from institutions not specialized to provide treatment for such

illnesses. As acute care hospitals that operate without

licensed psychiatric beds are not considered "existing

providers" under the need formula, the data from these

discharges is lost in the computation of numeric need for the

health planning district. Thus, even the mathematical need

calculation is artificially suppressed.

23. Given the history of the hospital closings and the

population for Lee County, AHCA Health Planning District 8 is

unique in its provision of psychiatric services.

24. The existing providers of psychiatric services in AHCA

Health Planning District 8 have not attempted to establish an

inpatient facility for Lee County. Moreover, they are not

growing the number of beds at their facilities. The use rate

declined when the Lee County facilities closed; therefore, it

can be reasonably presumed that the existing beds are not fully

serving the Lee County need.

25. Subsection 408.035(1)(b), Florida Statutes (2009),

requires the consideration of the availability, quality of care,

accessibility, and extent of utilization of existing health care

facilities and health services in the service district of the

applicant. In this case, Petitioner has a proven record of

quality of care. Moreover, Riverside has a strong utilization

record suggesting it is financially viable and well-established.

It has demonstrated 100 percent occupancy on a consistent basis.

It serves the greater Charlotte County area well. It has not,

however, attempted to fully address the needs of Lee County.

For AHCA Health Planning District 8, the existing providers,

while meeting the needs of their target market, have not

expanded to grow the markets to reach the state utilization

levels, nor attempted to grow their Lee County utilization. For

AHCA Health Planning District 8 as a whole, this means the needs

of the residents of the district are being addressed in a manner

inconsistent with the rest of the state. Were the proposed

project approved, AHCA Health Planning District 8 would more

closely resemble the rest of the state in how psychiatric

services are made available to the district.

26. Subsection 408.035(1)(c), Florida Statutes (2009),

dictates that the ability of the applicant to provide quality of

care and the applicant's record of providing quality of care

must be considered. In this instance, the applicant is a new

entity created to establish the proposed psychiatric hospital.

It does not have a record of providing quality of care. The

principals of the company, however, have long careers of

participation with providers that were able to provide quality

of care. Moreover, they have demonstrated that the temporary

15-bed unit that they are managing for an acute care hospital

meets all expected levels of quality of care. In short, the

applicant should be well-able to provide quality of care at the

proposed project.

27. Subsection 408.035(1)(d), Florida Statutes (2009),

cites the availability of resources, including health personnel,

management personnel, and funds for capital and operating

expenditures, for project accomplishment and operation must be

evaluated to determine whether a project should be approved.

The Pavilion has demonstrated it will be able to meet these

criteria.

28. The proposed staffing patterns are sufficient to

address the patient need and will meet or exceed the industry

standard in this regard. Moreover, the availability of health

and management personnel will also meet any patient need.

29. Subsection 408.035(1)(e), Florida Statutes (2009),

notes the extent to which the proposed services will enhance

access to health care for residents of the service district

should be considered when evaluating a CON. In this regard,

access for residents of AHCA Health Planning District 8 will be

enhanced. Residents of Lee County in particular will have an

inpatient psychiatric option not now available. As the health

planning district grows with new bed opportunity, psychiatric

utilization will likely grow to approach the state utilization

and be closer to the use norm found in other health planning

districts with adequate coverage.

30. Subsection 408.035(1)(f), Florida Statutes (2009),

requires the consideration of the immediate and long-term

financial feasibility of the proposal in order to fully evaluate

the CON application. In this case, the proposed project has

been demonstrated to be financially feasible in both the short

and long terms. The Pavilion will obtain funds from its

investors to meet the construction and short term needs.

Moreover, the financial schedules produced with the application

adequately outline the project's needs and proposed funding.

Funding to cover the proposed project's needs until the "break

even" point of its operation should be achieved without

difficulty based upon the project's projections and reasonable

assumptions.

31. The project construction costs and start-up expenses

are within the industry standard and were approximated using

standard data. The construction estimates are reasonable and

will allow the project to be built within the estimates

projected for the facility.

32. The Pavilion has demonstrated its proposed project is

also financially feasible in the long term. If the need and

utilization projections prove correct (and the record amply

supports those assumptions), the project should achieve

occupancy rates to support the financial feasibility of the

project in the long term. Based upon the historical use

(discharges evidencing mental health admissions), the projected

population growth for AHCA Health Planning District 8, the

likelihood that residents of Lee County will access inpatient

services locally, and the additional cases that can reasonably

be expected for the planning district, it is likely The Pavilion

will achieve its projections in the second year of operation.

Thus the project should be easily financially feasible in the

long as well as short term.

33. Subsection 408.035(1)(g), Florida Statutes (2009),

specifies that the extent to which the proposal will foster

competition that promotes quality and cost-effectiveness be

considered in the CON review process. As previously noted,

there will be no comparable inpatient psychiatric competition in

Lee County. In AHCA Health Planning District 8, the other

providers will continue to market their beds as they do now

without significant impact from the approval of the proposed

project. To the extent that patients will have an option and

the assumption that an option promotes competition, the approval

of the proposed project should promote quality and cost-

effectiveness as they will seek the best option for their

healthcare dollar. In truth however, there is no assurance that

the proposed project would promote competition leading to

quality and cost-effectiveness. Riverside provides quality care

and is well-established in its community. On a district-wide

basis the approval of the instant new hospital should not

adversely affect Riverside's market or ability to provide care

as it has in the past. Therefore it cannot be concluded that

this approval, in itself, will affect the overall market for

competition and cost-effectiveness.

34. Subsection 408.035(1)(h), Florida Statutes (2009),

addresses the costs and methods of the proposed construction,

including the cost and methods of energy provision and the

availability of alternative, less costly, or more effective

methods of construction in the review of the CON application.

In accordance with the findings of the Agency in its SAAR, the

construction proposed is appropriate. No more cost-effective

means of construction for the proposed site has been supported

by the record in this case. Accordingly, the cost and methods

of construction are deemed reasonable and within the financial

schedules presented in this cause.

35. Subsection 408.035(1)(i), Florida Statutes (2009),

provides for consideration of the applicant's past and proposed

provision of health care services to Medicaid patients and the

medically indigent in evaluating the CON application. The

Pavilion does not have a track record of providing care to

Medicaid patients and the medically indigent as it is a new

entity that will own and operate a new facility. Nevertheless,

The Pavilion has agreed to condition its CON on the provision of

charity and indigent care. The Pavilion estimates that it will

provide indigent care to not fewer than 30 people during its

first year of operation, 41 people during the second year, and

64 people during its third year. The Agency has found the level

of care proposed for charity and indigent care as proposed by

the applicant to be acceptable for AHCA Health Planning

District 8.

36. Subsection 408.035(1)(j), Florida Statutes (2009),

relates to nursing home beds and is not applicable to the

instant case.

37. The Pavilion has agreed to the following conditions

for the CON:

1. A commitment to become a Baker Act

receiving facility.

2. A commitment to provide outpatient

services.

3. A commitment to provide indigent and

charity care as a percentage of its total

patient days equal to or greater than the

average percent in AHCA Health Planning

District 8.

38. There is no financial barrier to access psychiatric

hospital services by the residents of AHCA Health Planning

District 8.

39. The quality of care rendered by all psychiatric

facilities in the district is acceptable.

40. Although there may be some impact on the admissions

and utilization at Riverside, the impact is not of such a

magnitude so as to adversely impact the quality of care and

provision of health services at that facility.

Other Considerations

41. The Pavilion has demonstrated that access to

psychiatric services will be enhanced by the establishment of

the new hospital in Lee County. The target population (adults

and the elderly) is growing in AHCA Health Planning District 8.

The programs The Pavilion intends to provide will be especially

helpful to address the mental health needs of the district.

More specifically, The Pavilion will offer a seniors transition

program, a seniors intervention program, an adult psychiatric

intensive care unit, and a full range of adult treatment

programs. The Pavilion will continue to work cooperatively with

other providers in Lee County to provide a full continuum of

services to the mental health patients of the district.

42. The Pavilion has also established the travel times for

residents of AHCA Health Planning District 8 will be enhanced

and dramatically improved with the establishment of the proposed

project. Florida Administrative Code Rule 59C-1.040(6)

provides:

Access Standard. Hospital inpatient general

psychiatric services should be available

within a maximum ground travel time of

45 minutes under average travel conditions

for at least 90 percent of the district’s

total population.

43. According to the traffic study completed by an

engineering firm, the AHCA access travel standard would not be

met in AHCA Health Planning District 8 absent the 15-bed unit at

Lee Memorial. Since that unit was opened in anticipation of the

proposed project, it should not be considered in determining

whether the travel time standard is met. That is to say,

without that unit, the standard is not met. Therefore, the

proposed project will allow for the standard to be met. For

example, that someone traveling to a fishing hole at an

unspecified time of day might be able to meet the travel time

standard does not refute the evidence that is more persuasively

established by the expert engineering study.

44. In this case, the proposed psychiatric hospital will

provide a convenience to residents of Lee County. Further,

physicians serving the mental health patient population will

have the convenience of admitting patients closer to their

residences. Many of these professionals actively support the

Pavilion's CON application. In fact, the public and

professional support of the instant application has been

unparalleled in the Agency's experience. The families of

patients seeking psychiatric services will also have the

convenience of the hospital closer to Lee County.

45. In connection with improved access for the health

planning district, the proposed project will offer inpatient and

outpatient psychiatric programs that will seek accreditation by

the Joint Commission on the Accreditation of Healthcare

Organizations. These programs will provide a structured

therapeutic environment. The Pavilion will partner with Lee

Mental Health to cross-refer patients to best address the

inpatient and outpatient needs.

46. Lee County has a significant elderly population (over

65). It is anticipated that the programs tailored to those

individuals will enhance the delivery of mental health services

to the elderly of AHCA Health Planning District 8.

47. In addition to the intervention, counseling and other

behavioral programs, the Pavilion will offer therapeutic

programs through a range of activities such as art, occupation

therapy, and group therapy.

48. Although the overall length of stay for the patient is

projected at 7.3 days (an assumption supported by the evidence),

the mental health care expected for the patient will extend

beyond that time frame and will be supported by a team of mental

health professionals who will follow-up and engage the patient

to remain under the direction and assistance of mental health

providers so that no one should "fall through the cracks" of

care.

49. The Pavilion will be licensed as a specialty hospital.

As such, it is ineligible to participate in the fee for service

aspect of the Florida Medicaid Program. It will, however, seek

to contract with Medicaid Health Maintenance Organizations and

Preferred Provider Organizations. It will provide charity care

of 2 percent of total cases or 1.5 percent of total days.

Further, it will become a Baker Act receiving facility and will

become the emergency access point for the most seriously ill

mental patients in the health planning district.

50. The psychiatric beds in AHCA Health Planning

District 8 are not located where they are available to large

segments of the adult population.

51. Given the range of psychiatric disorders specified by

the Diagnostic and Statistical Manual of Mental Disorders and

the related psychiatric disorders associated with the codes of

diagnosis, the psychiatric facilities in AHCA Health Planning

District 8 are insufficient to address the myriad of services

needed for mental health patients in the district, especially

those patients in Lee County.

52. Historically AHCA Health Planning District 8 has not

established coordinated and centralized services to support

psychiatric services of a larger and more diverse nature. The

establishment of The Pavilion will allow for a fuller range of

services to be established for the planning district.

The Agency's Rationale

53. The SAAR set forth the Agency's rationale for the

proposed approval of the CON application. The SAAR acknowledged

that the proposed project received varied support from numerous

sources. Further, the SAAR acknowledged that funding for the

project would be available; that the short-term position,

long-term position, capital requirements, and staffing for the

proposed project were adequate; that the project was financially

feasible if the applicant meets its projected occupancy levels;

and that the construction schedule is appropriate.

54. The SAAR also recognized the improved access for

residents of Lee County. This recognizes that the proposed

project assures that the travel time standard of the rule would

be met.

Impact on Existing Providers

55. The likely impact on existing providers has been

considered and weighed in the findings reached. To that end,

potential loss of admissions, shortened length of stay, and loss

of outpatient care have been reviewed. The persuasive weight of

the evidence finds that Riverside has enjoyed occupancy rates

over 75 percent for a prolonged period of time. Despite

enjoying such success, Riverside has not attempted to provide

Lee County with needed inpatient services to address the

disparate utilization seen when comparing AHCA Health Planning

District 8 to the state as a whole. This health planning

district has the lowest availability of adult inpatient

psychiatric beds in the state. When that deficiency is coupled

with Riverside's high use rate, it demonstrates that patients

cannot access psychiatric beds. Using modest market share

allocations, Riverside will continue to see utilization rates

that will allow it to profit. More important to AHCA, however,

Lee County will have a provider seeking to provide a full

continuum of services to the planning district.

56. Existing providers are not guaranteed any set market

share. In this case, Riverside has enjoyed a favorable

reputation in AHCA Health Planning District 8. There is no

evidence that a new provider will detract from that reputation

or that the referral system that Riverside has utilized to

achieve its market success will diminish. In short, the

psychiatric market is and will continue to be great enough for

all providers.

CONCLUSIONS OF LAW

57. DOAH has jurisdiction over the parties to and the

Fla. Stat. (2009).

58. The Pavilion has the burden to prove by a

preponderance of the evidence that its CON application should be

approved. See , e.g. , Boca Raton Artificial Kidney Center, Inc.

v. Dept. of Health and Rehabilitative Servs. , 475 So. 2d 260,

263 (Fla. 1st DCA 1985); § 120.57(1)(j), Fla. Stat. (2009).

59. The Agency's preliminary decision and the findings in

the SAAR are not entitled to a presumption of correctness in

this de novo proceeding. See generally Dept. of Transportation

v. J.W.C. Co., Inc. , 396 So. 2d 778, 787 (Fla. 1st DCA 1981).

The Agency's construction and interpretation of its rules and

the statutes that it is charged to implement, however, are

entitled to deference. See , e.g. , State Contracting &

Engineering Corp., v. Dept. of Transportation , 709 So. 2d 607,

610 (Fla. 1st DCA 1998); § 120.57(1)(l), Fla. Stat. (2007).

60. The decision of whether to approve a CON application

must be based on a balanced consideration of all statutory and

rule criteria. St. Joseph's Hospital v. Department of Health

and Rehabilitative Services , 536 So. 2d 346 (Fla. 1st DCA 1988);

Department of Health and Rehabilitative Services v. Johnson &

Johnson Home Healthcare, Inc. , 447 So. 2d 361 (Fla. 1st DCA

1984); Balsam v. Department of Health and Rehabilitative

Services , 486 So. 2d 1341 (Fla. 1st DCA 1986). The weight to be

given to each criterion is not fixed, but depends on the facts

and circumstances of each case. Collier Medical Center, Inc. v.

Department of Health and Rehabilitative Services , 462 So. 2d 83

(Fla. 1st DCA 1985).

61. All parties in this cause have the requisite standing

to participate in this proceeding pursuant to Subsection

408.039(5)(c), Florida Statutes (2009).

62. In this case The Pavilion has presented a need

methodology that argues the new psychiatric hospital should be

approved. The Agency supports that conclusion and the rationale

for its preliminary decision of approval is cogently articulated

in the SAAR. The opponent disagrees (for the most part) based

upon the perception that the assumptions relied upon by the

applicant are incorrect, that the approval will unduly harm

existing providers, and that a presumption of no need cannot be

overcome based upon the evidence presented in this case.

63. As to The Pavilion's methodology, this applicant has

demonstrated a new psychiatric hospital will enhance access and

provide an access to those residing in Lee County that will

enhance psychiatric services to all persons of the health

planning district. Further, the new psychiatric hospital will

provide patients with a meaningful option for inpatient services

for persons in Lee County. And finally, it will offer reduced

travel times for patients and their families using the facility.

Conveniences of access have been established. Additionally, The

Pavilion has shown that although there is no numeric need, AHCA

Health Planning District 8 is unique and should, with the

approval of the instant CON application, be able to grow its

psychiatric market to a utilization level more in line with the

rest of the state.

64. As to Petitioner's concern that the new hospital will

siphon patients from existing providers, the projected

population and utilization figures in AHCA Health Planning

District 8 should adequately generate sufficient patient days to

alleviate such fears. Competition for patient days dictates

that all providers offer quality programs and services to

address the population needs. In this instance the people of

Lee County have no local inpatient provider to address their

needs. With continuing population growth and utilization, all

psychiatric providers will compete for the patients on a more

even playing field. Balancing the applicable statutory and rule

criteria does not give an existing provider an unfair advantage.

There is no market share monopoly in health care. Since

Petitioner has a reputation for quality of care, its market

share in the planning district should not be adversely affected.

65. Improving access to psychiatric services including

emergency stabilization and Baker Act admissions in an under

served urban area is a laudable goal. The addition of the

subject hospital will provide such services.

66. Psychiatric patients requiring acute care hospital

services will be easily treated at the nearby hospital. On

balance the Pavilion has established need for its proposed new

hospital based upon its methodology and all pertinent rules and

statutes.

67. The opponent argues that the Pavilion inappropriately

amended its CON application in this proceeding. It is concluded

that any updates to the data and materials presented in this

cause did not constitute an unlawful amendment. Moreover, The

Pavilion has demonstrated a significant public interest in the

approval of the new hospital. The population, utilization,

demographics and needs of Lee County all support the approval of

the new psychiatric hospital. AHCA Health Planning District 8

will be better served as a result of the approval of the CON

application and the applicant has adequately demonstrated the

evidence supports that approval.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that a final order be entered by the Agency for

Health Care Administration that approves CON Application

No. 10034, with the conditions noted in the SAAR.

DONE AND ENTERED this 16th day of October, 2009, in

Tallahassee, Leon County, Florida.

S

J. D. PARRISH

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone]

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this day of , .

COPIES FURNISHED :

Holly Benson, Secretary

Agency for Health Care Administration

Fort Knox Building, Suite 3116

2727 Mahan Drive

Tallahassee, Florida 32308-5403

Justin Senior, Acting General Counsel

Agency for Health Care Administration

Fort Knox Building, Suite 3431

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308-5403

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308-5403

Lorraine M. Novak, Esquire

Agency for Health Care Administration

Fort Knox Building III, Mail Stop 3

2727 Mahan Drive, Suite 3431

Tallahassee, Florida 32308

Susan C. Smith, Esquire

Smith & Associates, P.A.

2873 Remington Green Circle

Tallahassee, Florida 32308

Cynthia S. Tunnicliff, Esquire

Pennington, Moore, Wilkinson,

Bell & Dunbar, P.A.

215 South Monroe Street, Second Floor

Post Office Box 10095

Tallahassee, Florida 32302-2095

Shaddrick Haston, Esquire

Agency for Health Care Administration

Fort Knox Building, Mail Stop 3

2727 Mahan Drive, Suite 3431

Tallahassee, Florida 32308

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.