15-001897CON Eighth Florida Living Options, Llc vs. Agency For Health Care Administration Status: Closed Recommended Order on Monday, February 22, 2016.

Summary: On balance, under applicable criteria, the evidence showed that the CON application of the preliminarily-approved applicant should be approved for the establishment of a 120-bed nursing home in Polk County, Florida.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

EIGHTH FLORIDA LIVING OPTIONS,

LLC,

Petitioner,

vs. Case No. 15 - 1897CON

LAKELAND OAKS NH, LLC AND AGENCY

FOR HEALTH CARE ADMINISTRATION,

Respondents.

_______________________________/

LAKELAND OAKS NH, LLC,

Petitioner,

vs. Case No. 15 - 1903CON

EIGHTH FLORIDA LIVING

OPTIONS, LLC,

Respondent.

_______________________________/

RECOMMENDED ORDER

An administrative hearing was held in this case on

October 27 through 29, and November 2, 5 , and 10, 2015 , in

Tallahassee, Florida, before James H. Peterson, III,

Administrative Law Judge with the Division of Administrative

Hearings.

APPEARANCES

For Lakeland Oaks NH, LLC:

Seann M. Frazier, Esquire

Parker, Hudson, Rainer & Dobbs LLP

215 South Monroe Street, Suite 750

Tallahassee, Florida 32301

Jonathan L. Rue , Esquire

Parker, Hudson, Rainer & Dobbs LLP

Suite 3600

303 Peachtree Street, Northeast

Atlanta, Georgia 30308

For Eighth Florida Living Options, LLC:

Jay Adam s , Esquire

Frank P. Rainer, Esquire

Broad and Cassel

215 South Monroe Street, Suite 400

Post Office Box 11300

Tallahassee, Florida 32301

For the Agency for Health Care Administration:

Richard J. Saliba, Esquire

Kevin Michael Marker , Esquire

Agency for Health Care Administration

2727 Mahan Drive , Mail Stop 3

Tallahassee, Florida 32308

STATEMENT OF THE ISSUE

Which certificate of need application seeking to establish

a new 120 - bed community nursing home in Nursing Home District 6,

Subdistrict 5 (Polk County), on balance, best satisfies the

statutory and rule criteria for approval: Lakeland Oaks NH,

LLC Ó s CON Application No. 10309 , or Eighth Florida Living

Options, LLC Ó s CON Application No. 10303.

PRELIMINARY STATEMENT

Lakeland Oaks NH, LLC ( Lakeland Oaks) and Eight h Florida

Living Options, LLC ( Eighth Florida) are competing applicants

for a certificate of need (CON ) to construct a 120 - bed community

nursing home in Nursing Home District 6, Subdistrict 5

encompassing Polk County.

On October 3, 2014, the Agency for H ealth Care

Administration (the Agency or AHCA) published a need for 203

additional community nursing home beds in Nursing Home

Subdistrict 6 - 5 for the July 2017 planning horizon. After

reviewing the applications, on February 23, 2015, the Agency

published notice of its intent to preliminarily approve Lakeland

Oaks Ó CON Application No. 10309 and to prelim inarily deny Eighth

Florida Ó s CON Application No. 10303. The notice also addressed

other applications not at issue in this proceeding, including

the Agency Ó s preliminar y approval of applications submitted by

Florida Presbyterian Homes, Inc. (14 beds) and Lakeland

Inve stors, LLC (69 beds), and denial of the remain ing

applications submitted in Nursing Home Subdistrict 6 - 5.

On March 16, 2015, Eighth Florida timely filed a petition

for formal administrative hearing to contest the Agency Ó s

preliminary denial of its application and the approval of

Lakeland Oaks Ó application. On March 27, 2015, Lakeland Oaks

timely filed a cross - petition supporting the Agency Ó s

preliminary decision. The p etitions were referred to the

Division of Administrative Hearings (DOAH) on April 8 and

April 9 , 2015 , respectively .

These cases were consolidated by Order entered May 7, 2015,

and initially scheduled for a final hearing to be held

September 29 through October 2 and October 6 through October 9,

2015. Thereafter, Eight Florida filed a Motion to Reschedule

Final Hearing which was granted and t he final hearing was

rescheduled and held on October 27 through 29 and November 2, 5,

and 10, 2015.

At the final hearing, Lakeland Oaks presented the testimony

of Robert Yandek, Vice Presid ent for Ancillary Services and

Development for Greystone Healthcare Management; Patches Bryan,

Chief Executive Clinical Officer of Greystone Healthcare

Management , who testified as an expert in skilled nursing

facility clinical operations; Christopher Mast erson, Senior Vice

President of Care Innovations for Greystone Healthcare

Management; Connie Bessler, Chief Executive Officer of Greystone

Healthcare Management , who testified as an expert in skilled

nursing facility administration; Mark D. Miller , corporate

director for rehabilitation at Greystone Healthcare Management;

Robert Hill, a principal at Veralon Partners, who provided

testimony as an expert in health care planning; Bo Russ,

president of Architectural Concepts, Inc. , who testified as an

ex pert in healthcare architecture, facility planning and design,

and project costs; and Ronald J. Swartz, Chief Financial Officer

of Greystone Healthcare Management , who testified as an expert

in healthcare finance. Lakeland Oaks Exhibits 1Ċ14, 16Ċ22, 24,

2 6Ċ35, 35A, 36Ċ4 1 , 43Ċ47, 49, 51Ċ77, 79Ċ82, 91, 99, 100 , and 112

were admitted into evidence.

Eighth Florida presented the testimony of Deborah Franklin,

Chief Operating Officer of Florida Living Options, Inc., who

testified as an expert in nursing home administration; Steven

Jones , who testified as an expert in healthcare finance; Sharon

Gordon - Girvin , who testified as an expert in health planning;

Marilyn Holt , who testified as an expert in rehabilitation;

Kevin J. Bessolo who testified as an expert in architecture and

nursing home design and construction; and Kim Broom , who

testified as an expert in risk management and quality assurance.

Eighth Florida Exhibits 1Ċ5 and 6A were admitted into evidence.

The Agenc y called as a witness Marisol Fitch, the

supervisor of the certificate of need program, who was accepted

as an expert in healthcare planning and certificate of need.

AHCA E xhibit 1 was admitted into evidence.

The T ranscript of the final hearing, consisting of six

volumes, was filed at DOAH on November 23, 2015. Following an

Order Granting a Motion to Extend Time for Filing Proposed

Recommended Orders , the original deadline for filing proposed

recommended orders was extended from January 15, 2016, until

Feb ruary 1, 2016. On February 1, 2016, Lakeland Oaks and Eighth

Florida filed their respective Proposed Recommended O rders , and

AHCA filed a notice adopting the Proposed Recommended Order

submitted by Lakeland Oaks. The parties Ó Proposed Recommended

Orders were considered in the preparation of this Recommended

Order.

FINDINGS OF FACT

I. The Parties

A. Lakeland Oaks NH, LLC

1. Lakeland Oaks, LLC, is a Delaware , limited - l iability

company formed by Greystone Healthcare Management Corporation

(Greystone) for the purpose of filing its certificate of need

application at issue in this proceeding. Greystone is a

Delaware , for - profit , co rporation which operates 26 skilled

nursing facilities, two assisted living facilities, and six home

health branches in Flori da. It also operates 10 nursing homes

in Ohio. Recently, Greystone constructed and opened a new

nursing home known as The Club Health and Rehabilitati on Center

at the Villages ( The Club Villages) in Marion County , Florida .

Greystone is headquartered in Tampa , Florida ad jacent to Polk

County.

B. Eighth Florida Living Options, LLC

2. Eighth Florida Living Options, LLC, is a Florida ,

limited - liability company formed by Florida Living Options, Inc.

(Florida Living Options) for the purpose of filing its

c ertificate of need application at issue in this proceeding.

Florida Living Options is a Florida not - for - pr ofit corporation

which operates three skilled nursing facilities , three assisted

living facilities, and two independent living facilities in

Florida. Among them, Florida Living Options operates an

assisted living facility known as Hawthorne Lakeland in Polk

County, Florida, and recently construct ed and open ed a new

nursing home in Sarasota, Florida , known as Hawthorne Village of

Sarasota. Florida Liv ing Options is headquartered just outside

of Tampa about six miles f rom the Greystone headquarters.

C. Agency for Health Care Administration

3. AHCA is the state agency that administers Florida Ó s CON

program.

II. Procedural History

A. The Fixed Need Pool

4. On October 3, 2014, the Agency published a need for 203

additional community nursing home beds in Nursing Home

Subdistrict 6 - 5 encompassing Polk County , for the July 2017

Planning Horizon. In response , eight applicants, including

Lakeland Oaks and Eighth Florida, filed CON applications seeking

to establish new community nursing home beds in Polk County.

5. On February 23, 2015, the Agency published official

notice of its decisions on those applications. The Agency

awar ded all 203 beds f rom the fixed - need pool, approving

applications filed by Flori da Presbyterian Homes, Inc.

(14 beds), Lakeland Investors, LLC (69 beds), and Lakeland Oaks

(120 beds). The Agency denied the remaining applications;

including Eighth Florida Ó s CON Application No. 10303 seeking

120 beds from the fixed - need pool .

6. Eighth Florida initially challenged all three awards,

but voluntarily dismissed its challenge to Florida Presbyterian

Homes, Inc. and Lakeland Investors, LLC Ó s awards prior to the

f inal hearing. As a result, only 1 20 of the 203 beds in the

fixed - need pool are at issue in this proceeding.

B. The Proposals

(i) Greystone Ó s Lakeland Oaks

7. Lakeland Oaks Ó CON Application No. 10309 proposes to

develop a 120 - bed skilled nursing facility (SNF) in Sub - district

6 - 5, Polk County, consisting of 60 private rooms and 30 semi -

private rooms.

8. Lakeland Oaks proposes to offer high quality , short -

term rehabilitation services and long - term care services in a

country club style atmosphere. Some of the services Lakeland

Oaks plans to offer include physical, o ccupational, and speech

therapy; wound care; pain management; and lymphedema therapy.

9. Lakeland Oaks Ó proposal is partially modeled after a

new SNF established by Greystone called The Club Villages in

Marion County, Florida.

10. Greystone developed The Club Villages in 2012 through

the transfer of 60 beds from New Horizon NH, LLC , d/b/a The

Lodge Health and Rehabilitation Center, an existing 159 - bed

skilled nursing facility in Ocala, Marion County.

11. The Club Villages provides short - term rehabilitation

to patients in a resort - style environment. T he Club Villages

has been successful since its opening, achieving full

util ization within less than six months of operation. It

recently added eight additional beds, resulting in a total bed

complement of 68 beds, through a statutory exemption for highly

utilized nursing home prov iders.

12. The Club Villages was awarded the LTC & Senior Living

LINK Spirit of Innovation Award, which recognizes facilities

with innovativ e and inspirational designs.

13. As of the final hearing, Greystone had not made a

formal decision on site selecti on for the proposed Lakeland Oaks

project. However, the evidence at hearing showed that Greystone

plans to construct the proposed Lakeland Oaks facility in Polk

County at one of four potential sites located near the I - 4

interstate and major roadways for e asy accessibility in an area

with a high concentration of residents age 65 and older.

14. The potential sites are in close proximity to the

existing acute care hospitals in Polk County , which, from a

health planning perspective, would promote a coordina tion of

care. Given the number of available potential sites, it is not

expected that Greystone will have difficulty securing a location

for the proposed Lakeland Oaks project.

(ii) Eighth Florida Living Options

15. Eighth Florida Ó s CON Application No. 10303 proposes to

establish a 120 - bed SNF next to Hawthorne Lakeland, Florida

Living Options Ó existing assisted living facility in Polk

County. The proposed facility will consist of two 60 - bed pods,

consisting of p rivate and semi - pri vate rooms.

16. If approved, Eighth Florida Ó s proposed SNF will be

part of a campus known as Hawthorne Village. In addition to the

proposed SNF and Hawthorne Lakeland, Eighth Florida affiliates

also plan to construct and operate a second assisted living

facility and an independent living facility on the Hawthorne

Village campus.

17. An important part of Florida Living Options Ó business

model is to provide skilled nursing, assisted living, and

independent livi ng services on the same campus. By providing

different levels of care on the same campus, it is envisioned

that residents of Florida Living Options Ó facilities can

transition among the facilities as their care needs change.

18. Eighth Florida plans to model its proposed skilled

nursing facility o n Hawthorne Village of Sarasota (Hawthorne -

Sarasota) , which opened in January 2013. Compared to

Greystone Ó s The Club Villages, Hawthorne - Sarasota had a slow

ramp up and only ac hieved 85 percent utilization after 24 months

of operation.

C. The Agency Ó s Preliminary Decision

19. On February 23, 2015, i n Volume 41, Number 36 of the

Florida Administrative Record , the Agency for Health Care

Administration (AHCA) announced its intent to award 83 of the

beds identified to be needed in Polk County to other appl icants

not involved in this hearing; to approve the application of

Lakeland Oaks for CON 10309 for 120 beds ; and to deny the

application of Eighth Florida for CON 10303 for 120 beds.

III. Statutory and Rule Review Criteria

The statutory review criteri a for reviewing CON

Applications for new nursing homes are found in s ection 408.035,

Florida Statutes, and Florida Administrative Code Rule 59C -

1.036 . 1/ Each statutory and rule criterion is addressed below.

A. Section 408.035(1)(a): The need for the health care

facilities and health services being proposed

20. There is a need for additional community nursing home

beds in Nursing Home Subdistrict 6 - 5, Polk County. Both

Lakeland Oaks and Eighth Florida Ó s CON applications seek to

ful fill a portion of the published need for additional beds in

Polk County. I n addition to the published fixed - need pool , both

Lakeland Oaks and Eighth Florida have stipulated to the need and

performed their own needs assessment that verified the need for

ad ditional community nursing home beds in Nursing Hom e

Subdistrict 6 - 5, Polk County.

21. At present, Polk County has 24.7 nursing home beds per

1,000 residents. Even with the addition of 203 beds as

projected by the fixed - need pool, population growth will cause

Polk County Ó s bed ratio to decline to only 23.6 beds per 1,000

residents by the end of the planning horizon. Accordingly,

there is a need for additional community nursing home beds in

Polk County.

22. Polk County has a large, fast growing elderly

population. According to population data published by AHCA,

f rom 2010 to 2014, the 65 and older population in Polk County

grew by nine percent , which exceeded the statewide growth rate

of si x percent . For the time period 2014 to 2017, the 65

population in Polk County is expected to gr ow at an even faster

rate of 10 percent , which is substantial.

B. Section 408.035(1)(b): The availability, quality of

care, accessibility, and extent of utilization of existing

health care facilities and health services in the se rvice

district of the applicant

23. Polk County currently has twenty - four (24) nursing

home facil ities with 2,945 licensed beds. Polk County Ó s

existing nursing home beds are highly utilized. For the

12 - month period ending June 2014, Polk County Ó s existing nursing

home beds had a total av erage occupancy rate of 90.29 percent .

That occupancy rate is higher than the national rate and Nursing

Home District 6 Ó s avera ge occupancy rate as a whole.

24. At such high utilization, Polk County Ó s e xisting

nursing home beds are not sufficiently avai lable to Polk County

residents. Further, Polk County Ó s existing nursing home beds

are not adequate to meet the projected increase in demand for

skilled nursing services in Polk Cou nty over the planning

ho rizon.

25. Eighth Florida proposes to locate its skilled nursing

facility in Zip Code 33813 , co - located with Florida Living

Option Ó s existing assisted living facility . The need for

additional community nursing beds in Polk County, however, is

countywide and not specific to a particular zip code or assisted

living facility . In contrast, Lakeland Oaks Ó proposed project

is located and designed to address the needs of Polk County

residents as a whole with access designed to locate near a major

hospital, and , as such, will better ensure access to short - term

rehabilitation and long - term care services in Sub - district 6 - 5.

C. Section 408.035(1)(c): The ability of the applicant to

provide quality of care and the applicant Ó s reco rd of

providing quality of care

26. Both applicants go to great length s to provide and

improve their quality of care. Both applicants propose to use

an electronic health record (EHR) system called Point Click Care

(PCC). All of Florida Living Options Ó facilities currently use

PC C. Eighteen (18) of Greystones facilities use PCC, and, by

the end of 2016, all Greystone facilities will use PCC.

27. In addition to PCC, both Greystone and Florida Living

Options use Ð Casamba, Ñ a rehab - specific electronic medical

record that enables th e facilities to maintain electronic plans

of care and track patients Ó progress in real - time throughout

their stay.

28. Greystone and Florida Living Options have implemented

Quality Assurance Perfor mance Improvement (QAPI ) plans in their

facilities. The QAPI program is a rigorous program for the

improvement of quality of care and overall performance . It

addresses the full range of services offered by a nursing home

and is designed to promote safety and high quality with all

clinical interventions while emphasizing autonomy and choice in

daily life for residents. A QAPI plan is now mandated for use

in all nursing homes. Both Greystone and Florida Living Options

initiated the QAPI program in their facilities before mandated

to do so.

29. Both Greystone and Florida Living Option have

developed a range of policies and programs designed to promote

quality of care in their respective facilities. Greystone, for

example, develops Ð Centers of Excellence Ñ within its facilities.

A Center of Excellence has speci alized expertise in treating

patients with certain conditions such as stroke, pulmonary,

cardiac, or orthopedics. Greystone has developed Centers of

Excellence that relate to short - term rehabilitation and therapy,

and partners with health systems to devel op initiatives to

reduce hospital readmissions.

30. In addition to Centers of Excellence, Greystone

develops other specialized programs in its facilities tailored

towards common diagnoses of patients discharged from area

hospitals. All Greystone faciliti es have an internal Risk

Management/Quality Assurance program overseen by a committee

that includes the medical director of each SNF. The committee

meets on a monthly basis to assess resident care and facility

practices as well as to develop, implement, a nd monitor plans of

action.

31. Greystone also routinely conducts on - site mock surveys

of its facilities to ensure that they are in compliance with all

federal and state laws and regulations.

32. Greystone employs a variety of organization - specific

qua lity improvement policies and programs, including the Believe

Balance Assessment Tool, the Operation Make a Difference Policy,

the Care Line Policy, and the Culture of Care Program, to

promote quality of care within its facilities. The Believe

Balance Ass essment Tool is a scorecard that enables facilities

to monitor their performance with respect to such criteria as

patient satisfaction and clinical care.

33. The Operation Make a Difference Policy is intended to

help Greystone facilities identify opportun ities for improvement

and implement positive change to improve the facilities Ó quality

of care and patient well - being.

34. Greystone Ó s Care Line is a toll - free number that is

staffed 24 hours a day and allows Gre ystone to quickly address

resident and/or f amily member concerns.

35. Greystone Ó s Culture of Care program is designed to

ensure that Greystone patients receive patient - centered care

that meets their individual needs.

36. Greystone also provides voluntary patient satisfaction

surveys to its shor t - term rehabilitation patients upon

discharge. For the period December 2014 to July 31, 2015,

92 percent of former residents indicated that they would

recommend a Greystone facility to patients in need of short - term

rehabilitation care. In sum, Greystone has developed strategies

that help its facilities provide quality care.

37. Florida Living Options is also working constantly to

improve the quality of care in its facilities. Personnel in its

facilities hold regular meetings with their hospital partner s to

track and reduce readmissions and work with hospitals to develop

protocols for dealing with the diagnoses that result in most

readmissions.

38. Florida Living Options develops particular protocols

for treating conditions that it sees and treats reg ularly in its

nursing homes. Internally, they hold daily quality assurance

meetings to discuss recent developments and immediate resident

needs, and hold weekly Ð at - risk Ñ meetings to evaluate particular

cases and assure that the residents are being treated in the

most appropriate manner.

39. Florida Living Options Ó facilities include physician

treatment rooms in their nursing homes, which encourage

physicians to come to t he nursing home more often and to examine

patients regularly. In addition, Florida Living Options has

Advanced Registered Nurse Practitioners in each of its buildings

to provide enhanced nursing services as directed by the doctor.

40. In order to provide for each resident Ó s specific

needs, residents in Florida Living Options Ó facilities are fully

evaluated and an individual care plan is prepared immediately

upon admission, together with a discharge plan that identifies

anticipated discharge so that care c an best prepare residents

for that event.

41. Finally, Florida Living Options continues to follow a

discharged resident to confirm that they are doing well and

access any continuing needs.

42. Both applicants propose rehabilitative facilities and

equipm ent for its residents. Eighth Florida proposes to equip

its facility with state of the art HUR equipment with the

capability to transmit patient performance directly to the

Casamba electronic records program. The equipment can be used

for strength condit ioning, transfer improvement, and balance

improvement, among other things.

43. Florida Living Options has developed specific

protocols for trea ting rehabilitative conditions. Eighth

Florida Ó s therapy gym will include two types of Ð zero G Ñ

devices : ceiling track and hydro track . These devices allow

persons who are not weight bearing (or who are partially weight

bearing) to develop strength and balance without having to put

all of their weight on their legs. Two additional specific

pieces of equipme nt proposed for Eighth Florida include a

VitaStim device that provides electrical stimulation that helps

a person relearn how to swallow , and a device called Game Ready .

Game Ready is popular with football trainers and orthopedic

patients that use ice and pressure to reduce swelling and pain

around elbow and knee joint replacement sites.

44. Greystone outfits the gyms in its skilled nursing

facilities with a variety of rehab equipment, including high - low

tables, mats, hand weights, leg weights, an d modern

strengthening machines. In addition, many Greystone SNFs have

additional high - end, state - of - the - art equipment such as the

AlterG and Biodex. The AlterG is an anti - gravity treadmill that

enables patients with weight - bearing restrictions to use th eir

muscles, preventing disuse atrophy. A Biodex is used for

balance re - training.

45. If approved, Lakeland Oaks proposes to have separate

therapy gyms for its short - term rehabilitation and long - term

care programs. By having two therapy gyms, Lakeland Oaks would

be able to offer therapy services tailored to both patient

populations Ó needs. In contrast, Eighth Florida proposes to

have one centralized therapy gym for its entire facility.

46. Although quality may be measured by many metrics, the

five - st ar rating system published by the Centers for M edicare

and Medicaid Services ( CMS) has become the most commonly used

measure of quality among nursing homes. CMS is the federal

agency that oversees the Medicare and Medicaid programs.

47. CMS developed the five - star rating system for nursing

homes in 2008. The ratings are scaled on a statewide basis and

provide a mechanism to compare nursing homes within a state.

Only 10 percent of nurs ing homes in a state receive a five - star

rating. Seventy per cent receive a two through four - star rating.

The bottom 20 percent receives a one - star rating. A nursing

home Ó s score is derived from a variety of criteria, including

the results of its health inspection surveys, staffing data, and

quality measure scores. A nursing home Ó s star rating is

available on the CMS Nursing Home Compare website.

48. As of July 2015, Greystone Ó s average star rating for

its Florida facilities was 3.3 stars, which is above average.

For the same time frame, Eighth Florida Ó s average rat ing was

2.6 stars or slightly below average. Further, several

Greystone facilities, includi ng The Club Villages, received

five - star ratings.

49. Greystone has also received other quality - related

awards. In 2015, seven skilled nursing facilities operated by

Greystone in Florida received the American Health Care

Association National Quality Award Program Bronze Award. The

Bronze Award is awarded to SNFs that have demonstrated their

commitment to quality improvement. In addition, Greenbriar

Rehabi litation and Nursing Center, a Greystone facility located

in Bradenton, Florida, was awarded the Silver Award in

recognition of its good performance outcomes. In contrast, only

one Florida Living Options Ó skilled nursing facility has

received the Br onze A ward. Florida Living Options explained

that it decided not to pursue additional bronze awards believing

that these awards reflect more of a paperwork compliance than an

actual measure of quality. The greater number of awards

received by Greystone, howeve r, has not be en ignored.

D. Section 408.035(1)(d): The availability of resources,

including health personnel, management personnel, and funds

for capital and operating expenditures, for proje ct

accomplishment and operation

50. Lakeland Oaks Ó total project costs, as reflected in

Schedule 1 of its CON application, are $22,877,084. The total

project costs are based upon a detailed budget and workpapers

underlying the numbers contained in the financial schedules to

Lakeland Oaks Ó CON application . Because of its size, Greystone

is able to purchase equipment at a lower cost than other smaller

providers. The project costs include $1.2 million for

equipment. The equipment list is based upon consultation with

Greystone Ó s purchasing department and i dentification of what

items are needed, along with the cost of those items. The

project costs set forth in Lakeland Oaks Ó Schedule 1 are

reasonable and appropriate.

51. Schedule 2 of Lakeland Oaks Ó CON application sets

forth an accurate and reasonable l isting of Lakeland Oaks Ó

capital projects ( i.e. , only the proposed Lakeland Oaks SNF).

52. Schedule 3 of Lakeland Oaks Ó CON application

identifies the source of project funds, and reflects the two

sources included in Schedule 2 : cash - on - hand and non - rela ted

company financing. Based on the audit of the parent

organization of Lakeland Oaks, Greystone has a large amount of

cash - on - hand, totaling $21,972,271. This greatly exceeds the

projected $4,575,414 cash - on - hand needed for the project.

53. With respe ct to non - related company financing,

Lakeland Oaks included a letter from The Private Bank, an

outside lender that previously has worked with Greystone in the

financing of its skilled nursing facility projects. The letter

indicates the bank Ó s interest in funding the Lakeland Oaks

project. Greystone previously has obtained approximately six

mortgages from this outside lender to acquire properties and

develop projects. The lender has never declined to finance a

project proposed by Greystone. The l ender ty pically funds

between 75 and 80 percent of the cost of a project. Lakeland

Oaks will be able to obtain the necessary outside financing to

fund the remainder of the cost of the Lakeland Oaks project.

54. Lakeland Oaks Ó projected staffing for its facility is

set forth on Schedule 6A of its CON application. In projecting

its staffing, Greystone considered its other skilled nursing

facilities that are comparable in size to Lakeland Oaks and the

projected payor mix of Lake land Oaks. Facilities with higher

Medicare populations, such as the proposed Lakeland Oaks

facility, generally require higher levels of staffing in light

of the acuity of Medicare patients recently discharged from

hospitals. In addition, Medicare patient s often requ ire

physical therapy services. Lakeland Oaks specifically

considered the higher resource utilization required by Medicare

patients in developing its projected staffing. Additionally,

Lakeland Oaks considered the needs of managed care patients and

long - term Medicaid patients in connection with its projected

staffing.

55. To calculate the projected wages, Lakeland Oaks

considered the actual wages paid at comparable Greystone

facilities, adjusted those wages using a Medicare wage index

that acc ounted for inflation, and utilized the wage index

applicable to Polk County facilities. The projected staffing,

and the annual salaries associated with staffing the facility,

are reasonable and appropriate. Lakeland Oaks will be able to

staff the facilit y at the projected salaries.

56. While Florida Living Options explained its recruitment

program and generous benefits package to attract qualified

employees , its proposed funding is unconvincing . Schedule 3 of

Eighth Florida Ó s CON application shows that Eighth Florida

proposes to fund its project with $250,000 cash - on - hand and

$24,452,400 in related company financing. Schedule 3 does not

reflect any non - related company financing. The CON application

requires an applicant to attach proof of the financial strength

to lend in the form of audited financial statements. The only

audited financial statement Eighth Florida included in its

application is the financial statement of the applicant entity,

which reflects only $250,000 cash - on - hand . Eighth Florida

o mitted the audited financial statements of any related entity

that would reflect the ability to fund the approximately

$24 million to be ob tained from the related party. As a result,

Eighth Florida failed to prove its ability to fund the project,

and the project does not appear to be financially feasible in

the short term.

57. While there was a letter within its application

discussing the possibility of outside financing, Eighth

Florida Ó s CON application is premised upon funding by affiliate

reserves. Indeed, Schedule 1, lines 32 - 41, indicates that

information pertaining to outside financing is inapplicable

because the project is 100 percent funded by affiliate reserves

and no fees or interest charges are anticipated. If Eighth

Florida had proposed out side financing, it would have had to

complete those lines of the application.

E. Section 408.035(1)(e): The extent to which the

proposed services will enhance access to health care for

residents of the service district

58. While both applicants argue that their proposed

projects will improve access to health care for residents of

Subdistrict 6 - 5 , Lakeland Oaks Ó prop osed project will better

e nhance acc ess . Eighth Florida Ó s zip code analysis and focus on

serving residents of Hawthorne Village is myopic when compared

to Lakeland Oaks Ó proposed project designed to p rovide access to

Polk County as a whole .

F. Section 408.035(1)(f): The immediate and long - term

financial feasibility of the proposal

59. Schedule 3 of Lakeland Oaks Ó CON application s ets

forth an accurate and reasonable source of funds to develop the

project. As previously explained , Greystone is financially

capable of funding the project, partially from cash - on - hand and

partially from outside financing. The project is financially

feasible in the short term.

60. Lakeland Oaks Ó projected utilization of its skilled

nursing facility is reflected on Sch edule 5 of its CON

application. The projected utilization is reasonable and

achievable. Greystone has be en able to achieve a high rate of

utilization at The Club Villages in a short period of time.

Greystone also has a process to inform hospitals and physicians

of its skilled nursing services, including the placement of

clinical liaisons in hospitals and ph ysician offices. Greystone

also enjoys a good reputation that serves to attract patients,

including specifically Medicare patients, to its facilities.

Finally, the Lakeland Oaks facility will house long - term care

residents, which generally are easier to attract to a facility

than patients in need of short - term rehabilitation.

61. With regard to long term financial feasibility issues,

Schedule 7 of Lakeland Oaks Ó CON application sets forth revenues

based on patient days and an assumed payor mix. The pay or mix

assumptions and projected revenues are accurate and reasonable.

The assumed payor mix is based on the experience of other

Greystone facilities.

62. Specifically, Lakeland Oaks projects in its second

year of operation 7.96 percent self - pay patien t days;

29.2 percent Medicaid days; 41.59 percent Medicare Part A days;

15.04 percent Ð Other Managed Care Ñ days. Medicare Advantage, or

Medicare Part C, accounts for 90 percent of the Ð Other Managed

Care Ñ days. Finally, Lakeland Oaks projects 6.19 percen t in

Ð Other Payer Ñ patient days, including VA and hospice patients.

Based on Greystone Ó s experience at other, similar facilities,

the forecast is reasonable.

63. Schedule 8 of Lakeland Oaks Ó CON application sets

forth its projected income statement for the facility, including

total revenues and expenses. For year two of operations,

Lakeland Oaks will have a projected total net income of

$1,997,665. This is an accurate and reasonable project ion, and

the project will be financially feasible in both the short - term

and long - term.

64. With regard to the reasonableness of Lakeland Oaks Ó

fill rate, Greystone facilities have experienced an average

occupancy in excess of 91 percent for the years 2010 - 2013.

Greystone has demonstrated the ability to obtain a 94 percent

occupancy level in many of its facilities, and it is reasonable

to project that it will be able to achieve the 94 - percent

occupancy projected for the Lakeland Oaks facility within two

years. Eighth Florida Ó s expert , Sharon Gordon - Girvin, agreed

t hat Lakeland Oaks Ó projected 94 - percent occupancy is

achievable.

65. Lakeland Oaks Ó projected Medicare census is in line

with the Medicare population served by Greyst one at its other

facilities, including a 150 - bed home in Miami - Da de County

(39 percent Medicare), a facility in Marion County (42 percent

Medi care) and The Club Villages (83 percent Medicare).

66. Eighth Florida Ó s own expert, Ms. Gordon - Girvin,

prepared three CON applications for Greystone that reflected

substantial levels of Medicare utilization and did not object to

the projected Medicare population. Additionally, CMS data shows

that Polk County has a high number of Medicare beneficiaries in

comparison to the entire State of Florida, with 119,643 Medicare

beneficiaries. Polk County is ranked in the top 10 counties in

Florida in terms of the number of Medicare Part A beneficiaries.

Finally, a facility in Polk County, Spring Lake, which serves a

substan tial number of Medicare patients in need of

rehabilitation services, experiences a Medicare utilization rate

of 64 percent . In sum, Lakeland Oaks Ó projected Medicare

utilization is reasonable and achievable.

67. Lakeland Oaks projected $150,000 for prope rty taxes as

part of its CON application. While Eighth Florida Ó s fina ncial

expert, Steve Jones , opined that Lakeland Oaks Ó projected

property taxes were understated, his analysis computed the

property tax based on certain components of Lakeland Oaks Ó

proj ected project costs. Property taxes , however, are based on

an assessed value of property, not the costs to construct a

facility. Lakeland Oaks Ó financial expert, Mr. Swartz, examined

the 2015 property taxes at Greystone Ó s other facilities. The

highest p roperty tax rate for any of the Greystone facilities,

when inflated forward one year, is $149,381.62. This is

consistent with Lakeland Oaks Ó projected property taxes of

$150,000. Thus, the projected property taxes as set forth in

the application are reas onable and accurate.

68. In its CON application, Eighth Florida projected a

year one loss of $1,646,400 and a year two profit of $502,945.

However, Eighth Florida Ó s CON application reflects erroneous

financial projections and financial deficiencies, some of which

were acknowledged by Eighth Florida Ó s financial expert,

Mr. Jones.

69. First, Eighth Florida Ó s projected Medicaid rate is

erroneous. Eighth Florida ass umed an incorrect occupancy rate

in calculating its Fair Rental Value Rate (FRVS) rate, which is

the property component of the Medicaid rate paid by the State of

Florida. Specifically, Eighth Florida assumed a 75 percent

occupancy in year two of its opera tion, while th e Medicaid

allowable rate is 90 percent occupancy in year two . Eighth

Florida Ó s financial expert, Steve Jones, acknowledged the error

in the assumed Medicaid rate related to the occupancy factor.

70. In addition, E ighth Florida will not qualify for

principal and interest in its FRVS calcul ation. A provider must

have 60 percent mortgage debt in order to receive principal and

interest in its FRVS computation. Eigh th Florida does not meet

the 60 percent test because it relies upon related - party

financing, which is not considered a mortgage. Further, Eighth

Florida utilized an erroneous interest rate. Because it does

not project any outside financing, nor a mortgage, it should

have used the Chase Prime Rate, which is about 2.25 percent les s

than what Eighth Florida assumed in it Medicaid rate

calculations. These errors are material in that they result in

approximately $135,000 in overstated Medicaid revenue and

overstated net income for year two , during which Eighth

Florida Ó s financial sch edules project a net profit of

approximately $500,000.

71. In response to the opinion that Eighth Florida would

not be entitled to principal and interest in its assumed FRVS

rate, Mr. Jones maintained that the financing of the project

would qualify for treatment as a mortgage, even though the

application is premised upon related - party financing. However,

AHCA Ó s rate setting department concluded that borrowing from a

related party against reserves, as proposed by Eighth Florida,

cannot be considered a mo rtgage. Mr. Jones conceded that he had

never seen AHCA recognize affiliated entity debt as a mortgage.

Considering the facts and opinions offered at the final hearing,

i t is concluded that related party borrowing cannot be treated

as a mortgage.

72. Mor eover , Schedule 1 of Eighth Florida Ó s CON

application did not include any construction period interest.

Lakeland Oaks Ó healthcare financial expert, Ronald Swartz

reasonably estimated that approximately $700,000 - $750,000 in

construction period interest was omitted from Eighth Florida Ó s

project costs. As a result, Eighth Florida would require more

cash - on - hand to fund the extra costs. This, in turn, affects

the income statement , resulting in understated expenses and

overstated net income.

73. Mr. Jones a cknowledged that construction period

interest is normally included. In this application, he did not

include that item based upon a cost/benefit analysis and his

conclusion that the inclusion of construction period interest

would not provide Ð useful Ñ finan cial information. Based upon

Generally Accepted Accounting Principles and relevant financial

standards pertaining to the capitalization of interest, whether

construction period interest should be included in financial

projections generally turns on concep ts of time and materiality.

Here, the construction project will take nearly two years, and

construction period interest will total approximately $700,000

to $750,000. Thus, construction period interest is material and

the interest charge should have been included in Eighth

Florida Ó s financial schedules.

74. Next , Eighth Florida projected a utilization or Ð fill Ñ

rate that is higher than the fill rate Florida Living Options

was able to achieve when it opened Hawthorne - Sarasota. A fill

rate describes how quickly a facility reaches an anticipated

occupancy level. It is appropriate to consider Florida Living

Options Ó prior history of filling its new facilities. With

regard to Florida Living Options Ó experience at Hawthorne -

Sarasota, that facility reached 8 5 percent occupancy by the end

of its second year of operation. The Sarasota facility had

approximately a 35 percent occu pancy level at the end of year

one , which translates to a first year av erage occupancy of 16 or

17 percent . At the beginning of year two, it experienced

approximately 43 percent occupancy.

75. In contrast, Eighth Florida Ó s CON application project s

an 89 percent occupancy level by mont h 11. Based on Florida

Living Options Ó experience in Sarasota, the projection is

unreasonable. If Eighth Florida Ó s proposed facility fills at

the same rate as the Sarasota facility, year two of Eighth

Florida Ó s operation would result in a larger financial loss and

a greater need for working capital. Given that, Eight Florida Ó s

year two projected net i ncome would actually become a net loss,

and additional working capital would be needed. While Eighth

Florida Ó s expert, Mr. Jones, sought to distinguish the Sarasota

market from the Polk County market, nonetheless, it is relevant

to examine the occupancy l evel Florida Living Options was able

to achieve in connection with the opening of a new facility in

the Sarasota market.

76. The financial feasibility of a skilled nursing

facility is an important consideration. Considering the issues

surrounding Eighth Florida Ó s fill rate at the end of year one,

construction period interest, and the erroneous Medicaid rate,

it appears likely that Eighth Florida would experience a year

two net loss , bring ing into question the long - term financial

feasibility of Eighth Florida Ó s CON application .

G. Section 408.035(1)(g): The extent to which the

proposal will foster competition that promotes quality and

cost - effectiveness

77. I t stands to reason that approval of either

application will foster competition due to the fact that

additional nursing home beds with new amenities are proposed to

be added in Polk County . The extent of that competition,

however, is not evident , and the undersigned agrees with the

determination of AHCA on page 93 of its State Agency Action

Report submitted in this proceeding that Ð These projects are not

likely to have a material impact on competition to promote

quality and cost - effectiveness. Ñ

H . Section 408.035(1)(h): The costs and methods of the

proposed construction , including the costs and methods of

energy provision and the availability of alternative, less

costly, or more ef fective methods of construction

78. The Florida Building Code (Building Code) governs the

design and construction of skilled nursing facilities. Under

the Building Code, a skilled nursing facility may be designed

based on either an Ð institutional Ñ design model or a Ð household Ñ

design model. To obtain AHCA Ó s approval of a proposed SNF, AHCA

requires parties to designate which design model has been

selected.

79. An institutional design model involves centralized

services. By contrast, the household design model involves

decentralized services contained within a Ð neighborhood Ñ or

unit.

80. Section 420.3.2.2 of the Building Code regulates the

household design model, and requires that dinin g activity in

social areas be decentralized and included within the resident

household. Section 420.3.2.2.1 further provides that Ð each

reside nt household (unit) shall be limited to a maximum of

20 residents. Ñ Additionally, s ection 420.3.2.2.2 requires that

two individual households be grouped into a distinct

neighborhood with a maximum of 40 residents who may share the

required residential cor e areas.

81. Lakeland Oaks Ó architectural expert, Bo Russ, and his

firm, Architectural Concepts, created the schematic design used

in Lakeland Oaks Ó CON application. In addition, Mr. Russ and

Architectural Concepts provided cost estimates, systems

descriptions, and the construction timeline for the project.

Architectural Concepts has worked with Greystone in the

development of other skilled nursing facilities in Florida,

including the design and construction of The Club Villages, The

Club at Ocala, and The Club at Kendall.

82. The design of The Club Villages is based on a

hospitality model (i.e., the resident - c entered culture change

model). The social and dining areas of The Club Villages are

located within indivi dual neighborhoods. Each neighborhood has

a private dining room. Patient rooms surround the dining area.

The Club Villages includes a Bistro Restaurant located at the

center of the facility for family members and guests. The Club

Villages also has spac e for the provision of rehabilitation

services, including two large gyms within the physical therapy

suite. The facility has skylights throughout the structure and

other features to retain residential elements.

83. In preparing the architectural design f or Lakeland

Oaks Ó proposal, Architectural Concepts incorporated certain

aspects of the design of The Club Villages. The Lakeland Oaks

design is based on the Ð institutional model, Ñ but with certain

embellishments intended to give the facility a Ð household, Ñ

residential feel. The proposed Lakeland Oaks facility is

approximately 84,000 sq uare feet. The facility has 10 - foot

ceilings, a residential - oriented interior design, residential

lighting, residential furniture, a large porte cochere, a lobby

area simil ar to The Club Villages, a Bistro, a central dining

area within the community that is divided into four dining rooms

with unique interior vernacular, a movie theater, a satellite

therapy gym, offices for staffing, a separate Activities of

Daily Living suit e, a doctors lounge, and three nursing units.

84. With regard to physical therapy services, the proposed

Lakeland Oaks facility will include two large gyms at the center

of the therapy suite, a private outpatient therapy entrance, a

large classroom, and s pace for other ancillary services. The

design will allow for a concierge approach to therapy to treat

patients in need of those services. The proposed Lakeland Oaks

facility is reasonably and appropriately designed for use as a

skilled nursing facility, and promotes high quality of care.

85. In developing the design of the facility, Mr. Russ

considered the fact that Lakeland Oaks proposes to offer both

short - term and long - term care.

86. Greystone has developed two similar skilled nursing

facilities, The Club at Kendall, a 150 - bed skilled nursing

facility, and The Club at Ocala, a 154 - bed facility, both of

which are similar in design to Lakeland Oaks. Greystone has

received AHCA approval of the design and construction for both

of those facilities.

87. Lakeland Oaks Ó proposed construction costs are

$17,289,054, or $185 per square foot. The estimated

construction costs are based on similar projects, including The

Club at Ocala at $178 pe r square foot. The construction costs

are reasonable and appropriate.

88. The architectural plan, design, and features presented

by Lakeland Oaks satisfy the architectural criteria applicable

to skilled nursing facilities in Florida. The facility compl ies

with all applicable construction, design, and life safety code

requirements.

89. Lakeland Oaks also presented a reasonable timeline for

completion of the project. The timeline is based on Greystone Ó s

prior experience in constructing similar skilled nursing

facilities.

90. Mr. Russ reviewed Eighth Florida Ó s architectural plans

and schematics for conformity with applicable criteria. Eighth

Florida Ó s architectural plans and schematics were prepared by

Bessolo Design Group ( Bessolo Group ). Because of design flaws

inconsistent with the Building Code, the architectural plans and

design proposed by Eighth Florida and Bessolo Group should not

be approved by AHCA.

91. Eighth Florida Ó s proposed design will be reviewed by

AHCA based on the p rovisions governing the institutional design

model. The design fails to meet certain distance requirements

found in the Building Code provisions gov erning an institutional

design. Speci fically, Florida Building Code s ection 420.3.2.1.2

(n ow renumbered as Building Code s ection 450.3.2.1.2) provides

that the travel distance from the entrance door of the farthest

patient room to the nurse Ó s station cannot exceed 150 feet. In

addition, the distance from a patient room to a clean utility

and soiled utility ro om cannot exceed 150 feet. Based on the

schematic plan presented by Eighth Florida and Bessolo Group ,

the distance from the most remote patient room to the nurse Ó s

station well exceeds 150 feet. In addition, the distance from

the most remote patient room to the soiled/utility rooms well

exceeds 150 feet. These flaws cannot be remedied without

substantial design changes .

92. In addition , the Eighth Florida/ Bessolo Group design

includes deficiencies related to smoke compartments, nourishment

stations , an d other items. These m ore minor flaws can be

remedied without substantial changes.

93. However, as to the 150 - foot limit, Eighth Florida Ó s

non - compliance makes the design a failed model. The facility

cannot be approved in its current design. In order to be

approvable, the facility would need to undergo a major redesign,

including a change in the size and configuration of the

building. This, in turn, would impact all of the financial

assumptions contained in Eighth Florida Ó s CON application.

94. In response to Mr. Russ Ó opinions, Eighth Florida Ó s

architectural expert, Kevin Bessolo, contended that the

deficiencies related to the 150 - feet distances from the patient

room to the nurses station and soiled/clean utility areas were

not fatal because the p lan was based upon the Ð household model . Ñ

95. Mr. Besselo acknowledged that, if the design is

considered to be Ð institutional , Ñ then the travel distances

would exceed the 150 - foot distance requirements. Mr. Besselo

also acknowledged that a skilled nurs ing facility can either be

an institutional design model or a household design model, but

not both. Mr. Bessolo further acknowledged that his position

that the plan is approvable is contingent upon the design being

considered under the household design mo del in accordance with

the Building Code. Mr. Bessolo disagreed with the criticism

offere d by Mr. Russ regarding the 150 - feet distance requirements

because he contended that his design presents a household model.

96. Eighth Florida Ó s schematic design , however, does not

comply with the Building Code Ó s requirements for a household

design model. Eighth Florida Ó s proposed building is divided

into 30 - bed neighborhoods that exceed the Building Code Ó s 20 - bed

maximum for the household design. In addition, Eig hth Florida Ó s

plan presents three households sharing a central services area .

Finally, the dining area presented in the Eighth Florida plan is

centralized, rather than decentralized as required for the

household design model. Because the proposal does no t qualify

as a household model, AHCA should review it under the

institutional plan provisions.

97. In turn, Mr. Bessolo offered criticisms of Lakeland

Oaks Ó proposed architectural plan. These included issues

related to the distance to soiled utility exce eding 150 feet,

resident storage areas, central bathing area, no emergency food

storage, smoke compartment issues, secondary exit issues, and

the planned movie theater. However, unlike Eighth Florida Ó s

major deficiencies related to the 150 - f oo t distant li mits from

the nurse Ó s station and from the clean and soiled utility rooms,

the criticisms offered by Mr. Bessolo are easily rectifiable by

Lakeland Oaks without substantial change .

I. Section 408.035(1)(i): The applicant Ó s past and

proposed provision of health care services to Medicaid

pati ents and the medically indigent

98. Greystone has a strong history of serving Medicaid

patients in Florida. On a company - wide basis, 53.65 percent of

all patient days in Greystone SNFs were provided to Medicaid

pa tients during calendar year 2014.

99. Lakeland Oaks plans to treat Medicaid patients at its

proposed facility. In its second year of operation, Lakeland

Oaks projects that almost 30 percent of its patient days will be

Medicaid days. Additionally, if Ð d ual eligibles Ñ (i.e.,

patients with Medicare as a primary payer but also eligible for

Medicaid) are taken into account, Lakeland Oaks Ó provision of

services to Medicaid patients will be even higher. Lakeland

Oaks Ó payor mix assumptions were based on Greystone Ó s actual

experience at comparable SNFs in Florida and are reasonable.

100. Eighth Florida projects in its second year of

op eration that approximately 40 percent of its patie nt days will

be Medicaid days. As previously explained, t hat proje ction is

questionable . The evidence at hearing showed that Hawthorne -

Sarasota, the facility upon which Eighth Florida Ó s proposal is

ba sed, had only eight percent Medicaid utilization after one and

a half years of operation.

IV. Factual Summary

101. The facts set forth above demonstrate that Greystone

has proposed a well - funded, financially feasible, well - designed

skilled nursing facility that will improve Polk County access to

short term and long term skilled nursing care for residents of

Polk County . Greystone has demonstrated a proven record of

providing high quality of care and the ability to assure quality

of care for the Lakeland Oaks proposal. In contrast, Eighth

Florida Ó s application was largely focused on improvi ng access to

those services within a certain zip code and for residents of

the Hawthorne Village community and not residents of Polk County

as a whole.

102. Greystone, Lakeland Oaks Ó parent company, has a long,

well - established history of providing high q uality care at over

two dozen skilled nursing facilities in Florida. On the other

hand , Florida Living Options, Eighth Florida Ó s parent, only

operates three skilled nursing facilities in Florida and does

not have as extensive of a track record in providin g high

quality care.

103. Moreover, Greystone has a well - established history of

providing skilled nursing services to a large volume of Medicaid

patients. On a company - w ide basis, over 50 percent of

Greystone Ó s patient days consist of Medicaid patients .

Conversely, Hawthorne - Sarasota, the facility upon which Eighth

Florida Ó s proposed project is bas ed, had only eight percent

Medicaid utilization in its first year and a half of operation,

calling into question Eighth Florida Ó s projection of 40 percent

Medicaid utilization in its app l ication.

104. Further, Eighth Florida has proposed to build a

nursing home with questionable inter - company financing and

uncertain financial feasibility. Eighth Florida Ó s facility

design does not meet code requirements and is unlikely to be

a pproved as proposed without substantial changes .

105. Considering both applications and the facts submitted

at the final hearing as outlined above, it is found that

Lakeland Oaks Ó CON application, on balance, best satisfies the

applica ble statutory and rule criteria.

CONCLUSIONS OF LAW

106. The Division of Administrative Hearings has

jurisdiction over the parties to, and the subject matter of,

these proceedings. See §§ 120.569, 120.57(1) and 408.039(5),

Fla. Stat.

107. The petitions in this case commenced a de novo

proceeding intended to formulate final agency action, Ð not to

review action taken earlier and preliminarily. Ñ Fla. Dep Ó t of

Trans p . v . J.W.C. Co. , 396 So. 2d 778, 786 - 87 (Fla. 1st DCA

1981)(citing McDonald v. Dep Ó t of Banking and Fin. , 346 So. 2d

569 (Fla. 1st DCA 1977)); § 120.57(1), Fla. Stat. Each

applicant for a CON has the burden of demonstrating that its

application should be approved. Boca Raton Artificial Kidney

Ctr. v. Dep Ó t of HRS , 475 So. 2d 250 (Fla. 1st DCA 1985).

108. Amendments to CON applications are prohibited by both

rule and Florida decisional law. See Fla. Admin. Code Rule 59C -

1.010(3)(b) ; Gulf Court Nursing Ctr. v. Dep Ó t of Health and

Human Servs. , 483 So. 2d 700, 707 (Fla. 1st DCA 1986).

Substantial changes to CON application s are not permitted.

Manor Care, Inc. (Sarasota), and Health Quest Corp. v. Dep Ó t of

HRS , 558 So. 2d 26 (Fla. 1st DCA 1989). Ð As to matters within

an applicant Ó s control, significant changes to a complet ed

application are not permitted. Ñ Id. at 29. In Manor Care , the

Court held that changing from a three - bed - per - room facility to a

two - bed - per - room facility was a prohibited amendment because the

change was substantial and within the control of the applic ant.

Thus, any attempts to explain away architectural and financial

concerns by offering alternative proposals that substantially

amend Eighth Florida Ó s application are prohibited.

109. The decision over which of the two applications

should be approved o r denied for a CON must be based upon a

balanced consideration of applicable statutory and rule

criteria. Dep Ó t of HRS v. Johnson and Johnson Home Healthcare,

Inc. , 447 So. 2d 361 (Fla. 1st DCA 1984); Balsam v. Dep Ó t of

HRS , 486 So. 2d 1315 (Fla. 1st DCA 1988). The weight to be

given to each criterion is not fixed, but instead varies

depending on the facts of each case. Collier Medical Ctr., Inc.

v. Dep Ó t of HRS , 462 So. 2d 83 (Fla. 1st DCA 1985).

110. In this case, the need for ad ditional community

nursing home beds in Nursing Home Subdistrict 6 - 5, Polk County

is undisputed. The parties have stipu lated that the applicable

fixed - need pool consists of 120 remaining beds. Both Lakeland

Oaks and Eighth Florida seek to establish nursi ng home beds with

exactly 120 beds, so the question presented in this proceeding

is which of the two applicants best meets applicable review

criteria.

111. Upon weighing and balancing all applicable criteria,

Lakeland Oaks Ó application is superior. Alt hough all criteria

were weighed, persuasive criteria include the superior quality

of care offered at Greystone Ó s existing nursing homes in

Florida, the superior architectural design and equipping of the

Lakeland Oaks proposed facility, Lakeland Oaks Ó more reliable

assurances of financial feasibility, and service to all

residents in need of skilled nursing services in Polk County .

All these criteria weigh in favor of approval of Lakeland Oaks Ó

application over Eighth Florida Ó s proposal.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Agency for Health Care

Administration enter a final order approving Lakeland Oaks NH,

LLC Ó s CON Application No. 10309 and denying Eighth Florida

Living Options, LLC Ó s CON Application No. 10303.

DONE AND ENTERE D this 22nd day of February , 2016, in

Tallahassee, Leon County, Florida.

S

JAMES H. PETERSON, III

Administrative Law Judge

Division of Administrative Hearings

The Desoto Building

1230 Apalachee Parkway

Tallahassee, Florida32399 - 3060

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 22nd day of February , 201 6 .

ENDNOTE

1/ All statutory and rule references are to current versions .

COPIES FURNISHED :

Richard Joseph Saliba, Esquire

Agency for Health Care Administration

2727 Mahan Drive , Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Jay Adams, Esquire

Broad and Cassel

Suite 400

215 South Monroe Street

Tallahassee, Florida 32301

(eServed)

Frank P. Rainer, Esquire

Broad and Cassel

Suite 400

215 South Monroe Street

Tallahassee, Florida 32301

(eServed)

Seann M. Frazier, Esquire

Parker, Hudson, Rainer and Dobbs, LLP

Suite 750

215 South Monroe Street

Tallahassee, Florida 32301

(eServed)

Jonathan L. Rue, Esquire

Parker, Hudson, Rainer

and Dobbs, LLC

Suite 3600

303 Peachtree Street , Northeast

Atlanta, Georgia 30308

(eServed)

K evin Michael Marker, Esquire

Agency for Health Care Administration

2727 Mahan Drive , Mail Stop 3

Tallahassee, Florida 3230 8

(eServed)

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Elizabeth Dudek, Secretary

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 1

Tallahassee, Florida 32308

(eServed)

Stuart Williams, General Counsel

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

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.