15-001903CON Lakeland Oaks Nh, Llc vs. Eighth Florida Living Options, Llc; Hsp Citrus, Llc; Florida Presbyterian Homes, Inc.; And Lakeland Investors, Llc
 Status: Closed
Recommended Order on Monday, February 22, 2016.


View Dockets  
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.

1STATE OF FLORIDA

4DIVISION OF ADMINISTRATIVE HEARINGS

8EIGHTH FLORIDA LIVING OPTIONS,

12LLC,

13Petitioner,

14vs. Case No. 15 - 1897CON

20LAKELAND OAKS NH, LLC AND AGENCY

26FOR HEALTH CARE ADMINISTRATION,

30Respondents.

31_______________________________/

32LAKELAND OAKS NH, LLC,

36Petitioner,

37vs. Case No. 15 - 1903CON

43EIGHTH FLORIDA LIVING

46OPTIONS, LLC,

48Respondent.

49_______________________________/

50RECOMMENDED ORDER

52An administrative hearing was held in this case on

61October 27 through 29, and November 2, 5 , and 10, 2015 , in

73Tallahassee, Florida, before James H. Peterson, III,

80Administrative Law Judge with the Division of Administrative

88Hearings.

89APPEARANCES

90For Lakeland Oaks NH, LLC:

95Seann M. Frazier, Esquire

99Parker, Hudson, Rainer & Dobbs LLP

105215 South Monroe Street, Suite 750

111Tallahassee, Florida 32301

114Jonathan L. Rue , Esquire

118Parker, Hudson, Rainer & Dobbs LLP

124Suite 3600

126303 Peachtree Street, Northeast

130Atlanta, Georgia 30308

133For Eighth Florida Living Options, LLC:

139Jay Adam s , Esquire

143Frank P. Rainer, Esquire

147Broad and Cassel

150215 South Monroe Street, Suite 400

156Post Office Box 11300

160Tallahassee, Florida 32301

163For the Agency for Health Care Administration:

170Richard J. Saliba, Esquire

174Kevin Michael Marker , Esquire

178Agency for Health Care Administration

1832727 Mahan Drive , Mail Stop 3

189Tallahassee, Florida 32308

192STATEMENT OF THE ISSUE

196Which certificate of need application seeking to establish

204a new 120 - bed community nursing home in Nursing Home District 6,

217Subdistrict 5 (Polk County), on balance, best satisfies the

226statutory and rule criteria for approval: Lakeland Oaks NH,

235LLC Ó s CON Application No. 10309 , or Eighth Florida Living

246Options, LLC Ó s CON Application No. 10303.

254PRELIMINARY STATEMENT

256Lakeland Oaks NH, LLC ( Lakeland Oaks) and Eight h Florida

267Living Options, LLC ( Eighth Florida) are competing applicants

276for a certificate of need (CON ) to construct a 120 - bed community

290nursing home in Nursing Home District 6, Subdistrict 5

299encompassing Polk County.

302On October 3, 2014, the Agency for H ealth Care

312Administration (the Agency or AHCA) published a need for 203

322additional community nursing home beds in Nursing Home

330Subdistrict 6 - 5 for the July 2017 planning horizon. After

341reviewing the applications, on February 23, 2015, the Agency

350published notice of its intent to preliminarily approve Lakeland

359Oaks Ó CON Application No. 10309 and to prelim inarily deny Eighth

371Florida Ó s CON Application No. 10303. The notice also addressed

382other applications not at issue in this proceeding, including

391the Agency Ó s preliminar y approval of applications submitted by

402Florida Presbyterian Homes, Inc. (14 beds) and Lakeland

410Inve stors, LLC (69 beds), and denial of the remain ing

421applications submitted in Nursing Home Subdistrict 6 - 5.

430On March 16, 2015, Eighth Florida timely filed a petition

440for formal administrative hearing to contest the Agency Ó s

450preliminary denial of its application and the approval of

459Lakeland Oaks Ó application. On March 27, 2015, Lakeland Oaks

469timely filed a cross - petition supporting the Agency Ó s

480preliminary decision. The p etitions were referred to the

489Division of Administrative Hearings (DOAH) on April 8 and

498April 9 , 2015 , respectively .

503These cases were consolidated by Order entered May 7, 2015,

513and initially scheduled for a final hearing to be held

523September 29 through October 2 and October 6 through October 9,

5342015. Thereafter, Eight Florida filed a Motion to Reschedule

543Final Hearing which was granted and t he final hearing was

554rescheduled and held on October 27 through 29 and November 2, 5,

566and 10, 2015.

569At the final hearing, Lakeland Oaks presented the testimony

578of Robert Yandek, Vice Presid ent for Ancillary Services and

588Development for Greystone Healthcare Management; Patches Bryan,

595Chief Executive Clinical Officer of Greystone Healthcare

602Management , who testified as an expert in skilled nursing

611facility clinical operations; Christopher Mast erson, Senior Vice

619President of Care Innovations for Greystone Healthcare

626Management; Connie Bessler, Chief Executive Officer of Greystone

634Healthcare Management , who testified as an expert in skilled

643nursing facility administration; Mark D. Miller , corporate

650director for rehabilitation at Greystone Healthcare Management;

657Robert Hill, a principal at Veralon Partners, who provided

666testimony as an expert in health care planning; Bo Russ,

676president of Architectural Concepts, Inc. , who testified as an

685ex pert in healthcare architecture, facility planning and design,

694and project costs; and Ronald J. Swartz, Chief Financial Officer

704of Greystone Healthcare Management , who testified as an expert

713in healthcare finance. Lakeland Oaks Exhibits 1Ċ14, 16Ċ22, 24,

7222 6Ċ35, 35A, 36Ċ4 1 , 43Ċ47, 49, 51Ċ77, 79Ċ82, 91, 99, 100 , and 112

736were admitted into evidence.

740Eighth Florida presented the testimony of Deborah Franklin,

748Chief Operating Officer of Florida Living Options, Inc., who

757testified as an expert in nursing home administration; Steven

766Jones , who testified as an expert in healthcare finance; Sharon

776Gordon - Girvin , who testified as an expert in health planning;

787Marilyn Holt , who testified as an expert in rehabilitation;

796Kevin J. Bessolo who testified as an expert in architecture and

807nursing home design and construction; and Kim Broom , who

816testified as an expert in risk management and quality assurance.

826Eighth Florida Exhibits 1Ċ5 and 6A were admitted into evidence.

836The Agenc y called as a witness Marisol Fitch, the

846supervisor of the certificate of need program, who was accepted

856as an expert in healthcare planning and certificate of need.

866AHCA E xhibit 1 was admitted into evidence.

874The T ranscript of the final hearing, consisting of six

884volumes, was filed at DOAH on November 23, 2015. Following an

895Order Granting a Motion to Extend Time for Filing Proposed

905Recommended Orders , the original deadline for filing proposed

913recommended orders was extended from January 15, 2016, until

922Feb ruary 1, 2016. On February 1, 2016, Lakeland Oaks and Eighth

934Florida filed their respective Proposed Recommended O rders , and

943AHCA filed a notice adopting the Proposed Recommended Order

952submitted by Lakeland Oaks. The parties Ó Proposed Recommended

961Orders were considered in the preparation of this Recommended

970Order.

971FINDINGS OF FACT

974I. The Parties

977A. Lakeland Oaks NH, LLC

9821. Lakeland Oaks, LLC, is a Delaware , limited - l iability

993company formed by Greystone Healthcare Management Corporation

1000(Greystone) for the purpose of filing its certificate of need

1010application at issue in this proceeding. Greystone is a

1019Delaware , for - profit , co rporation which operates 26 skilled

1029nursing facilities, two assisted living facilities, and six home

1038health branches in Flori da. It also operates 10 nursing homes

1049in Ohio. Recently, Greystone constructed and opened a new

1058nursing home known as The Club Health and Rehabilitati on Center

1069at the Villages ( The Club Villages) in Marion County , Florida .

1081Greystone is headquartered in Tampa , Florida ad jacent to Polk

1091County.

1092B. Eighth Florida Living Options, LLC

10982. Eighth Florida Living Options, LLC, is a Florida ,

1107limited - liability company formed by Florida Living Options, Inc.

1117(Florida Living Options) for the purpose of filing its

1126c ertificate of need application at issue in this proceeding.

1136Florida Living Options is a Florida not - for - pr ofit corporation

1149which operates three skilled nursing facilities , three assisted

1157living facilities, and two independent living facilities in

1165Florida. Among them, Florida Living Options operates an

1173assisted living facility known as Hawthorne Lakeland in Polk

1182County, Florida, and recently construct ed and open ed a new

1193nursing home in Sarasota, Florida , known as Hawthorne Village of

1203Sarasota. Florida Liv ing Options is headquartered just outside

1212of Tampa about six miles f rom the Greystone headquarters.

1222C. Agency for Health Care Administration

12283. AHCA is the state agency that administers Florida Ó s CON

1240program.

1241II. Procedural History

1244A. The Fixed Need Pool

12494. On October 3, 2014, the Agency published a need for 203

1261additional community nursing home beds in Nursing Home

1269Subdistrict 6 - 5 encompassing Polk County , for the July 2017

1280Planning Horizon. In response , eight applicants, including

1287Lakeland Oaks and Eighth Florida, filed CON applications seeking

1296to establish new community nursing home beds in Polk County.

13065. On February 23, 2015, the Agency published official

1315notice of its decisions on those applications. The Agency

1324awar ded all 203 beds f rom the fixed - need pool, approving

1337applications filed by Flori da Presbyterian Homes, Inc.

1345(14 beds), Lakeland Investors, LLC (69 beds), and Lakeland Oaks

1355(120 beds). The Agency denied the remaining applications;

1363including Eighth Florida Ó s CON Application No. 10303 seeking

1373120 beds from the fixed - need pool .

13826. Eighth Florida initially challenged all three awards,

1390but voluntarily dismissed its challenge to Florida Presbyterian

1398Homes, Inc. and Lakeland Investors, LLC Ó s awards prior to the

1410f inal hearing. As a result, only 1 20 of the 203 beds in the

1425fixed - need pool are at issue in this proceeding.

1435B. The Proposals

1438(i) Greystone Ó s Lakeland Oaks

14447. Lakeland Oaks Ó CON Application No. 10309 proposes to

1454develop a 120 - bed skilled nursing facility (SNF) in Sub - district

14676 - 5, Polk County, consisting of 60 private rooms and 30 semi -

1481private rooms.

14838. Lakeland Oaks proposes to offer high quality , short -

1493term rehabilitation services and long - term care services in a

1504country club style atmosphere. Some of the services Lakeland

1513Oaks plans to offer include physical, o ccupational, and speech

1523therapy; wound care; pain management; and lymphedema therapy.

15319. Lakeland Oaks Ó proposal is partially modeled after a

1541new SNF established by Greystone called The Club Villages in

1551Marion County, Florida.

155410. Greystone developed The Club Villages in 2012 through

1563the transfer of 60 beds from New Horizon NH, LLC , d/b/a The

1575Lodge Health and Rehabilitation Center, an existing 159 - bed

1585skilled nursing facility in Ocala, Marion County.

159211. The Club Villages provides short - term rehabilitation

1601to patients in a resort - style environment. T he Club Villages

1613has been successful since its opening, achieving full

1621util ization within less than six months of operation. It

1631recently added eight additional beds, resulting in a total bed

1641complement of 68 beds, through a statutory exemption for highly

1651utilized nursing home prov iders.

165612. The Club Villages was awarded the LTC & Senior Living

1667LINK Spirit of Innovation Award, which recognizes facilities

1675with innovativ e and inspirational designs.

168113. As of the final hearing, Greystone had not made a

1692formal decision on site selecti on for the proposed Lakeland Oaks

1703project. However, the evidence at hearing showed that Greystone

1712plans to construct the proposed Lakeland Oaks facility in Polk

1722County at one of four potential sites located near the I - 4

1735interstate and major roadways for e asy accessibility in an area

1746with a high concentration of residents age 65 and older.

175614. The potential sites are in close proximity to the

1766existing acute care hospitals in Polk County , which, from a

1776health planning perspective, would promote a coordina tion of

1785care. Given the number of available potential sites, it is not

1796expected that Greystone will have difficulty securing a location

1805for the proposed Lakeland Oaks project.

1811(ii) Eighth Florida Living Options

181615. Eighth Florida Ó s CON Application No. 10303 proposes to

1827establish a 120 - bed SNF next to Hawthorne Lakeland, Florida

1838Living Options Ó existing assisted living facility in Polk

1847County. The proposed facility will consist of two 60 - bed pods,

1859consisting of p rivate and semi - pri vate rooms.

186916. If approved, Eighth Florida Ó s proposed SNF will be

1880part of a campus known as Hawthorne Village. In addition to the

1892proposed SNF and Hawthorne Lakeland, Eighth Florida affiliates

1900also plan to construct and operate a second assisted living

1910facility and an independent living facility on the Hawthorne

1919Village campus.

192117. An important part of Florida Living Options Ó business

1931model is to provide skilled nursing, assisted living, and

1940independent livi ng services on the same campus. By providing

1950different levels of care on the same campus, it is envisioned

1961that residents of Florida Living Options Ó facilities can

1970transition among the facilities as their care needs change.

197918. Eighth Florida plans to model its proposed skilled

1988nursing facility o n Hawthorne Village of Sarasota (Hawthorne -

1998Sarasota) , which opened in January 2013. Compared to

2006Greystone Ó s The Club Villages, Hawthorne - Sarasota had a slow

2018ramp up and only ac hieved 85 percent utilization after 24 months

2030of operation.

2032C. The Agency Ó s Preliminary Decision

203919. On February 23, 2015, i n Volume 41, Number 36 of the

2052Florida Administrative Record , the Agency for Health Care

2060Administration (AHCA) announced its intent to award 83 of the

2070beds identified to be needed in Polk County to other appl icants

2082not involved in this hearing; to approve the application of

2092Lakeland Oaks for CON 10309 for 120 beds ; and to deny the

2104application of Eighth Florida for CON 10303 for 120 beds.

2114III. Statutory and Rule Review Criteria

2120The statutory review criteri a for reviewing CON

2128Applications for new nursing homes are found in s ection 408.035,

2139Florida Statutes, and Florida Administrative Code Rule 59C -

21481.036 . 1/ Each statutory and rule criterion is addressed below.

2159A. Section 408.035(1)(a): The need for the health care

2168facilities and health services being proposed

217420. There is a need for additional community nursing home

2184beds in Nursing Home Subdistrict 6 - 5, Polk County. Both

2195Lakeland Oaks and Eighth Florida Ó s CON applications seek to

2206ful fill a portion of the published need for additional beds in

2218Polk County. I n addition to the published fixed - need pool , both

2231Lakeland Oaks and Eighth Florida have stipulated to the need and

2242performed their own needs assessment that verified the need for

2252ad ditional community nursing home beds in Nursing Hom e

2262Subdistrict 6 - 5, Polk County.

226821. At present, Polk County has 24.7 nursing home beds per

22791,000 residents. Even with the addition of 203 beds as

2290projected by the fixed - need pool, population growth will cause

2301Polk County Ó s bed ratio to decline to only 23.6 beds per 1,000

2316residents by the end of the planning horizon. Accordingly,

2325there is a need for additional community nursing home beds in

2336Polk County.

233822. Polk County has a large, fast growing elderly

2347population. According to population data published by AHCA,

2355f rom 2010 to 2014, the 65 and older population in Polk County

2368grew by nine percent , which exceeded the statewide growth rate

2378of si x percent . For the time period 2014 to 2017, the 65

2392population in Polk County is expected to gr ow at an even faster

2405rate of 10 percent , which is substantial.

2412B. Section 408.035(1)(b): The availability, quality of

2419care, accessibility, and extent of utilization of existing

2427health care facilities and health services in the se rvice

2437district of the applicant

244123. Polk County currently has twenty - four (24) nursing

2451home facil ities with 2,945 licensed beds. Polk County Ó s

2463existing nursing home beds are highly utilized. For the

247212 - month period ending June 2014, Polk County Ó s existing nursing

2485home beds had a total av erage occupancy rate of 90.29 percent .

2498That occupancy rate is higher than the national rate and Nursing

2509Home District 6 Ó s avera ge occupancy rate as a whole.

252124. At such high utilization, Polk County Ó s e xisting

2532nursing home beds are not sufficiently avai lable to Polk County

2543residents. Further, Polk County Ó s existing nursing home beds

2553are not adequate to meet the projected increase in demand for

2564skilled nursing services in Polk Cou nty over the planning

2574ho rizon.

257625. Eighth Florida proposes to locate its skilled nursing

2585facility in Zip Code 33813 , co - located with Florida Living

2596Option Ó s existing assisted living facility . The need for

2607additional community nursing beds in Polk County, however, is

2616countywide and not specific to a particular zip code or assisted

2627living facility . In contrast, Lakeland Oaks Ó proposed project

2637is located and designed to address the needs of Polk County

2648residents as a whole with access designed to locate near a major

2660hospital, and , as such, will better ensure access to short - term

2672rehabilitation and long - term care services in Sub - district 6 - 5.

2686C. Section 408.035(1)(c): The ability of the applicant to

2695provide quality of care and the applicant Ó s reco rd of

2707providing quality of care

271126. Both applicants go to great length s to provide and

2722improve their quality of care. Both applicants propose to use

2732an electronic health record (EHR) system called Point Click Care

2742(PCC). All of Florida Living Options Ó facilities currently use

2752PC C. Eighteen (18) of Greystones facilities use PCC, and, by

2763the end of 2016, all Greystone facilities will use PCC.

277327. In addition to PCC, both Greystone and Florida Living

2783Options use Ð Casamba, Ñ a rehab - specific electronic medical

2794record that enables th e facilities to maintain electronic plans

2804of care and track patients Ó progress in real - time throughout

2816their stay.

281828. Greystone and Florida Living Options have implemented

2826Quality Assurance Perfor mance Improvement (QAPI ) plans in their

2836facilities. The QAPI program is a rigorous program for the

2846improvement of quality of care and overall performance . It

2856addresses the full range of services offered by a nursing home

2867and is designed to promote safety and high quality with all

2878clinical interventions while emphasizing autonomy and choice in

2886daily life for residents. A QAPI plan is now mandated for use

2898in all nursing homes. Both Greystone and Florida Living Options

2908initiated the QAPI program in their facilities before mandated

2917to do so.

292029. Both Greystone and Florida Living Option have

2928developed a range of policies and programs designed to promote

2938quality of care in their respective facilities. Greystone, for

2947example, develops Ð Centers of Excellence Ñ within its facilities.

2957A Center of Excellence has speci alized expertise in treating

2967patients with certain conditions such as stroke, pulmonary,

2975cardiac, or orthopedics. Greystone has developed Centers of

2983Excellence that relate to short - term rehabilitation and therapy,

2993and partners with health systems to devel op initiatives to

3003reduce hospital readmissions.

300630. In addition to Centers of Excellence, Greystone

3014develops other specialized programs in its facilities tailored

3022towards common diagnoses of patients discharged from area

3030hospitals. All Greystone faciliti es have an internal Risk

3039Management/Quality Assurance program overseen by a committee

3046that includes the medical director of each SNF. The committee

3056meets on a monthly basis to assess resident care and facility

3067practices as well as to develop, implement, a nd monitor plans of

3079action.

308031. Greystone also routinely conducts on - site mock surveys

3090of its facilities to ensure that they are in compliance with all

3102federal and state laws and regulations.

310832. Greystone employs a variety of organization - specific

3117qua lity improvement policies and programs, including the Believe

3126Balance Assessment Tool, the Operation Make a Difference Policy,

3135the Care Line Policy, and the Culture of Care Program, to

3146promote quality of care within its facilities. The Believe

3155Balance Ass essment Tool is a scorecard that enables facilities

3165to monitor their performance with respect to such criteria as

3175patient satisfaction and clinical care.

318033. The Operation Make a Difference Policy is intended to

3190help Greystone facilities identify opportun ities for improvement

3198and implement positive change to improve the facilities Ó quality

3208of care and patient well - being.

321534. Greystone Ó s Care Line is a toll - free number that is

3229staffed 24 hours a day and allows Gre ystone to quickly address

3241resident and/or f amily member concerns.

324735. Greystone Ó s Culture of Care program is designed to

3258ensure that Greystone patients receive patient - centered care

3267that meets their individual needs.

327236. Greystone also provides voluntary patient satisfaction

3279surveys to its shor t - term rehabilitation patients upon

3289discharge. For the period December 2014 to July 31, 2015,

329992 percent of former residents indicated that they would

3308recommend a Greystone facility to patients in need of short - term

3320rehabilitation care. In sum, Greystone has developed strategies

3328that help its facilities provide quality care.

333537. Florida Living Options is also working constantly to

3344improve the quality of care in its facilities. Personnel in its

3355facilities hold regular meetings with their hospital partner s to

3365track and reduce readmissions and work with hospitals to develop

3375protocols for dealing with the diagnoses that result in most

3385readmissions.

338638. Florida Living Options develops particular protocols

3393for treating conditions that it sees and treats reg ularly in its

3405nursing homes. Internally, they hold daily quality assurance

3413meetings to discuss recent developments and immediate resident

3421needs, and hold weekly Ð at - risk Ñ meetings to evaluate particular

3434cases and assure that the residents are being treated in the

3445most appropriate manner.

344839. Florida Living Options Ó facilities include physician

3456treatment rooms in their nursing homes, which encourage

3464physicians to come to t he nursing home more often and to examine

3477patients regularly. In addition, Florida Living Options has

3485Advanced Registered Nurse Practitioners in each of its buildings

3494to provide enhanced nursing services as directed by the doctor.

350440. In order to provide for each resident Ó s specific

3515needs, residents in Florida Living Options Ó facilities are fully

3525evaluated and an individual care plan is prepared immediately

3534upon admission, together with a discharge plan that identifies

3543anticipated discharge so that care c an best prepare residents

3553for that event.

355641. Finally, Florida Living Options continues to follow a

3565discharged resident to confirm that they are doing well and

3575access any continuing needs.

357942. Both applicants propose rehabilitative facilities and

3586equipm ent for its residents. Eighth Florida proposes to equip

3596its facility with state of the art HUR equipment with the

3607capability to transmit patient performance directly to the

3615Casamba electronic records program. The equipment can be used

3624for strength condit ioning, transfer improvement, and balance

3632improvement, among other things.

363643. Florida Living Options has developed specific

3643protocols for trea ting rehabilitative conditions. Eighth

3650Florida Ó s therapy gym will include two types of Ð zero G Ñ

3664devices : ceiling track and hydro track . These devices allow

3675persons who are not weight bearing (or who are partially weight

3686bearing) to develop strength and balance without having to put

3696all of their weight on their legs. Two additional specific

3706pieces of equipme nt proposed for Eighth Florida include a

3716VitaStim device that provides electrical stimulation that helps

3724a person relearn how to swallow , and a device called Game Ready .

3737Game Ready is popular with football trainers and orthopedic

3746patients that use ice and pressure to reduce swelling and pain

3757around elbow and knee joint replacement sites.

376444. Greystone outfits the gyms in its skilled nursing

3773facilities with a variety of rehab equipment, including high - low

3784tables, mats, hand weights, leg weights, an d modern

3793strengthening machines. In addition, many Greystone SNFs have

3801additional high - end, state - of - the - art equipment such as the

3816AlterG and Biodex. The AlterG is an anti - gravity treadmill that

3828enables patients with weight - bearing restrictions to use th eir

3839muscles, preventing disuse atrophy. A Biodex is used for

3848balance re - training.

385245. If approved, Lakeland Oaks proposes to have separate

3861therapy gyms for its short - term rehabilitation and long - term

3873care programs. By having two therapy gyms, Lakeland Oaks would

3883be able to offer therapy services tailored to both patient

3893populations Ó needs. In contrast, Eighth Florida proposes to

3902have one centralized therapy gym for its entire facility.

391146. Although quality may be measured by many metrics, the

3921five - st ar rating system published by the Centers for M edicare

3934and Medicaid Services ( CMS) has become the most commonly used

3945measure of quality among nursing homes. CMS is the federal

3955agency that oversees the Medicare and Medicaid programs.

396347. CMS developed the five - star rating system for nursing

3974homes in 2008. The ratings are scaled on a statewide basis and

3986provide a mechanism to compare nursing homes within a state.

3996Only 10 percent of nurs ing homes in a state receive a five - star

4011rating. Seventy per cent receive a two through four - star rating.

4023The bottom 20 percent receives a one - star rating. A nursing

4035home Ó s score is derived from a variety of criteria, including

4047the results of its health inspection surveys, staffing data, and

4057quality measure scores. A nursing home Ó s star rating is

4068available on the CMS Nursing Home Compare website.

407648. As of July 2015, Greystone Ó s average star rating for

4088its Florida facilities was 3.3 stars, which is above average.

4098For the same time frame, Eighth Florida Ó s average rat ing was

41112.6 stars or slightly below average. Further, several

4119Greystone facilities, includi ng The Club Villages, received

4127five - star ratings.

413149. Greystone has also received other quality - related

4140awards. In 2015, seven skilled nursing facilities operated by

4149Greystone in Florida received the American Health Care

4157Association National Quality Award Program Bronze Award. The

4165Bronze Award is awarded to SNFs that have demonstrated their

4175commitment to quality improvement. In addition, Greenbriar

4182Rehabi litation and Nursing Center, a Greystone facility located

4191in Bradenton, Florida, was awarded the Silver Award in

4200recognition of its good performance outcomes. In contrast, only

4209one Florida Living Options Ó skilled nursing facility has

4218received the Br onze A ward. Florida Living Options explained

4228that it decided not to pursue additional bronze awards believing

4238that these awards reflect more of a paperwork compliance than an

4249actual measure of quality. The greater number of awards

4258received by Greystone, howeve r, has not be en ignored.

4268D. Section 408.035(1)(d): The availability of resources,

4275including health personnel, management personnel, and funds

4282for capital and operating expenditures, for proje ct

4290accomplishment and operation

429350. Lakeland Oaks Ó total project costs, as reflected in

4303Schedule 1 of its CON application, are $22,877,084. The total

4315project costs are based upon a detailed budget and workpapers

4325underlying the numbers contained in the financial schedules to

4334Lakeland Oaks Ó CON application . Because of its size, Greystone

4345is able to purchase equipment at a lower cost than other smaller

4357providers. The project costs include $1.2 million for

4365equipment. The equipment list is based upon consultation with

4374Greystone Ó s purchasing department and i dentification of what

4384items are needed, along with the cost of those items. The

4395project costs set forth in Lakeland Oaks Ó Schedule 1 are

4406reasonable and appropriate.

440951. Schedule 2 of Lakeland Oaks Ó CON application sets

4419forth an accurate and reasonable l isting of Lakeland Oaks Ó

4430capital projects ( i.e. , only the proposed Lakeland Oaks SNF).

444052. Schedule 3 of Lakeland Oaks Ó CON application

4449identifies the source of project funds, and reflects the two

4459sources included in Schedule 2 : cash - on - hand and non - rela ted

4475company financing. Based on the audit of the parent

4484organization of Lakeland Oaks, Greystone has a large amount of

4494cash - on - hand, totaling $21,972,271. This greatly exceeds the

4507projected $4,575,414 cash - on - hand needed for the project.

452053. With respe ct to non - related company financing,

4530Lakeland Oaks included a letter from The Private Bank, an

4540outside lender that previously has worked with Greystone in the

4550financing of its skilled nursing facility projects. The letter

4559indicates the bank Ó s interest in funding the Lakeland Oaks

4570project. Greystone previously has obtained approximately six

4577mortgages from this outside lender to acquire properties and

4586develop projects. The lender has never declined to finance a

4596project proposed by Greystone. The l ender ty pically funds

4606between 75 and 80 percent of the cost of a project. Lakeland

4618Oaks will be able to obtain the necessary outside financing to

4629fund the remainder of the cost of the Lakeland Oaks project.

464054. Lakeland Oaks Ó projected staffing for its facility is

4650set forth on Schedule 6A of its CON application. In projecting

4661its staffing, Greystone considered its other skilled nursing

4669facilities that are comparable in size to Lakeland Oaks and the

4680projected payor mix of Lake land Oaks. Facilities with higher

4690Medicare populations, such as the proposed Lakeland Oaks

4698facility, generally require higher levels of staffing in light

4707of the acuity of Medicare patients recently discharged from

4716hospitals. In addition, Medicare patient s often requ ire

4725physical therapy services. Lakeland Oaks specifically

4731considered the higher resource utilization required by Medicare

4739patients in developing its projected staffing. Additionally,

4746Lakeland Oaks considered the needs of managed care patients and

4756long - term Medicaid patients in connection with its projected

4766staffing.

476755. To calculate the projected wages, Lakeland Oaks

4775considered the actual wages paid at comparable Greystone

4783facilities, adjusted those wages using a Medicare wage index

4792that acc ounted for inflation, and utilized the wage index

4802applicable to Polk County facilities. The projected staffing,

4810and the annual salaries associated with staffing the facility,

4819are reasonable and appropriate. Lakeland Oaks will be able to

4829staff the facilit y at the projected salaries.

483756. While Florida Living Options explained its recruitment

4845program and generous benefits package to attract qualified

4853employees , its proposed funding is unconvincing . Schedule 3 of

4863Eighth Florida Ó s CON application shows that Eighth Florida

4873proposes to fund its project with $250,000 cash - on - hand and

4887$24,452,400 in related company financing. Schedule 3 does not

4898reflect any non - related company financing. The CON application

4908requires an applicant to attach proof of the financial strength

4918to lend in the form of audited financial statements. The only

4929audited financial statement Eighth Florida included in its

4937application is the financial statement of the applicant entity,

4946which reflects only $250,000 cash - on - hand . Eighth Florida

4959o mitted the audited financial statements of any related entity

4969that would reflect the ability to fund the approximately

4978$24 million to be ob tained from the related party. As a result,

4991Eighth Florida failed to prove its ability to fund the project,

5002and the project does not appear to be financially feasible in

5013the short term.

501657. While there was a letter within its application

5025discussing the possibility of outside financing, Eighth

5032Florida Ó s CON application is premised upon funding by affiliate

5043reserves. Indeed, Schedule 1, lines 32 - 41, indicates that

5053information pertaining to outside financing is inapplicable

5060because the project is 100 percent funded by affiliate reserves

5070and no fees or interest charges are anticipated. If Eighth

5080Florida had proposed out side financing, it would have had to

5091complete those lines of the application.

5097E. Section 408.035(1)(e): The extent to which the

5105proposed services will enhance access to health care for

5114residents of the service district

511958. While both applicants argue that their proposed

5127projects will improve access to health care for residents of

5137Subdistrict 6 - 5 , Lakeland Oaks Ó prop osed project will better

5149e nhance acc ess . Eighth Florida Ó s zip code analysis and focus on

5164serving residents of Hawthorne Village is myopic when compared

5173to Lakeland Oaks Ó proposed project designed to p rovide access to

5185Polk County as a whole .

5191F. Section 408.035(1)(f): The immediate and long - term

5200financial feasibility of the proposal

520559. Schedule 3 of Lakeland Oaks Ó CON application s ets

5216forth an accurate and reasonable source of funds to develop the

5227project. As previously explained , Greystone is financially

5234capable of funding the project, partially from cash - on - hand and

5247partially from outside financing. The project is financially

5255feasible in the short term.

526060. Lakeland Oaks Ó projected utilization of its skilled

5269nursing facility is reflected on Sch edule 5 of its CON

5280application. The projected utilization is reasonable and

5287achievable. Greystone has be en able to achieve a high rate of

5299utilization at The Club Villages in a short period of time.

5310Greystone also has a process to inform hospitals and physicians

5320of its skilled nursing services, including the placement of

5329clinical liaisons in hospitals and ph ysician offices. Greystone

5338also enjoys a good reputation that serves to attract patients,

5348including specifically Medicare patients, to its facilities.

5355Finally, the Lakeland Oaks facility will house long - term care

5366residents, which generally are easier to attract to a facility

5376than patients in need of short - term rehabilitation.

538561. With regard to long term financial feasibility issues,

5394Schedule 7 of Lakeland Oaks Ó CON application sets forth revenues

5405based on patient days and an assumed payor mix. The pay or mix

5418assumptions and projected revenues are accurate and reasonable.

5426The assumed payor mix is based on the experience of other

5437Greystone facilities.

543962. Specifically, Lakeland Oaks projects in its second

5447year of operation 7.96 percent self - pay patien t days;

545829.2 percent Medicaid days; 41.59 percent Medicare Part A days;

546815.04 percent Ð Other Managed Care Ñ days. Medicare Advantage, or

5479Medicare Part C, accounts for 90 percent of the Ð Other Managed

5491Care Ñ days. Finally, Lakeland Oaks projects 6.19 percen t in

5502Ð Other Payer Ñ patient days, including VA and hospice patients.

5513Based on Greystone Ó s experience at other, similar facilities,

5523the forecast is reasonable.

552763. Schedule 8 of Lakeland Oaks Ó CON application sets

5537forth its projected income statement for the facility, including

5546total revenues and expenses. For year two of operations,

5555Lakeland Oaks will have a projected total net income of

5565$1,997,665. This is an accurate and reasonable project ion, and

5577the project will be financially feasible in both the short - term

5589and long - term.

559364. With regard to the reasonableness of Lakeland Oaks Ó

5603fill rate, Greystone facilities have experienced an average

5611occupancy in excess of 91 percent for the years 2010 - 2013.

5623Greystone has demonstrated the ability to obtain a 94 percent

5633occupancy level in many of its facilities, and it is reasonable

5644to project that it will be able to achieve the 94 - percent

5657occupancy projected for the Lakeland Oaks facility within two

5666years. Eighth Florida Ó s expert , Sharon Gordon - Girvin, agreed

5677t hat Lakeland Oaks Ó projected 94 - percent occupancy is

5688achievable.

568965. Lakeland Oaks Ó projected Medicare census is in line

5699with the Medicare population served by Greyst one at its other

5710facilities, including a 150 - bed home in Miami - Da de County

5723(39 percent Medicare), a facility in Marion County (42 percent

5733Medi care) and The Club Villages (83 percent Medicare).

574266. Eighth Florida Ó s own expert, Ms. Gordon - Girvin,

5753prepared three CON applications for Greystone that reflected

5761substantial levels of Medicare utilization and did not object to

5771the projected Medicare population. Additionally, CMS data shows

5779that Polk County has a high number of Medicare beneficiaries in

5790comparison to the entire State of Florida, with 119,643 Medicare

5801beneficiaries. Polk County is ranked in the top 10 counties in

5812Florida in terms of the number of Medicare Part A beneficiaries.

5823Finally, a facility in Polk County, Spring Lake, which serves a

5834substan tial number of Medicare patients in need of

5843rehabilitation services, experiences a Medicare utilization rate

5850of 64 percent . In sum, Lakeland Oaks Ó projected Medicare

5861utilization is reasonable and achievable.

586667. Lakeland Oaks projected $150,000 for prope rty taxes as

5877part of its CON application. While Eighth Florida Ó s fina ncial

5889expert, Steve Jones , opined that Lakeland Oaks Ó projected

5898property taxes were understated, his analysis computed the

5906property tax based on certain components of Lakeland Oaks Ó

5916proj ected project costs. Property taxes , however, are based on

5926an assessed value of property, not the costs to construct a

5937facility. Lakeland Oaks Ó financial expert, Mr. Swartz, examined

5946the 2015 property taxes at Greystone Ó s other facilities. The

5957highest p roperty tax rate for any of the Greystone facilities,

5968when inflated forward one year, is $149,381.62. This is

5978consistent with Lakeland Oaks Ó projected property taxes of

5987$150,000. Thus, the projected property taxes as set forth in

5998the application are reas onable and accurate.

600568. In its CON application, Eighth Florida projected a

6014year one loss of $1,646,400 and a year two profit of $502,945.

6029However, Eighth Florida Ó s CON application reflects erroneous

6038financial projections and financial deficiencies, some of which

6046were acknowledged by Eighth Florida Ó s financial expert,

6055Mr. Jones.

605769. First, Eighth Florida Ó s projected Medicaid rate is

6067erroneous. Eighth Florida ass umed an incorrect occupancy rate

6076in calculating its Fair Rental Value Rate (FRVS) rate, which is

6087the property component of the Medicaid rate paid by the State of

6099Florida. Specifically, Eighth Florida assumed a 75 percent

6107occupancy in year two of its opera tion, while th e Medicaid

6119allowable rate is 90 percent occupancy in year two . Eighth

6130Florida Ó s financial expert, Steve Jones, acknowledged the error

6140in the assumed Medicaid rate related to the occupancy factor.

615070. In addition, E ighth Florida will not qualify for

6160principal and interest in its FRVS calcul ation. A provider must

6171have 60 percent mortgage debt in order to receive principal and

6182interest in its FRVS computation. Eigh th Florida does not meet

6193the 60 percent test because it relies upon related - party

6204financing, which is not considered a mortgage. Further, Eighth

6213Florida utilized an erroneous interest rate. Because it does

6222not project any outside financing, nor a mortgage, it should

6232have used the Chase Prime Rate, which is about 2.25 percent les s

6245than what Eighth Florida assumed in it Medicaid rate

6254calculations. These errors are material in that they result in

6264approximately $135,000 in overstated Medicaid revenue and

6272overstated net income for year two , during which Eighth

6281Florida Ó s financial sch edules project a net profit of

6292approximately $500,000.

629571. In response to the opinion that Eighth Florida would

6305not be entitled to principal and interest in its assumed FRVS

6316rate, Mr. Jones maintained that the financing of the project

6326would qualify for treatment as a mortgage, even though the

6336application is premised upon related - party financing. However,

6345AHCA Ó s rate setting department concluded that borrowing from a

6356related party against reserves, as proposed by Eighth Florida,

6365cannot be considered a mo rtgage. Mr. Jones conceded that he had

6377never seen AHCA recognize affiliated entity debt as a mortgage.

6387Considering the facts and opinions offered at the final hearing,

6397i t is concluded that related party borrowing cannot be treated

6408as a mortgage.

641172. Mor eover , Schedule 1 of Eighth Florida Ó s CON

6422application did not include any construction period interest.

6430Lakeland Oaks Ó healthcare financial expert, Ronald Swartz

6438reasonably estimated that approximately $700,000 - $750,000 in

6448construction period interest was omitted from Eighth Florida Ó s

6458project costs. As a result, Eighth Florida would require more

6468cash - on - hand to fund the extra costs. This, in turn, affects

6482the income statement , resulting in understated expenses and

6490overstated net income.

649373. Mr. Jones a cknowledged that construction period

6501interest is normally included. In this application, he did not

6511include that item based upon a cost/benefit analysis and his

6521conclusion that the inclusion of construction period interest

6529would not provide Ð useful Ñ finan cial information. Based upon

6540Generally Accepted Accounting Principles and relevant financial

6547standards pertaining to the capitalization of interest, whether

6555construction period interest should be included in financial

6563projections generally turns on concep ts of time and materiality.

6573Here, the construction project will take nearly two years, and

6583construction period interest will total approximately $700,000

6591to $750,000. Thus, construction period interest is material and

6601the interest charge should have been included in Eighth

6610Florida Ó s financial schedules.

661574. Next , Eighth Florida projected a utilization or Ð fill Ñ

6626rate that is higher than the fill rate Florida Living Options

6637was able to achieve when it opened Hawthorne - Sarasota. A fill

6649rate describes how quickly a facility reaches an anticipated

6658occupancy level. It is appropriate to consider Florida Living

6667Options Ó prior history of filling its new facilities. With

6677regard to Florida Living Options Ó experience at Hawthorne -

6687Sarasota, that facility reached 8 5 percent occupancy by the end

6698of its second year of operation. The Sarasota facility had

6708approximately a 35 percent occu pancy level at the end of year

6720one , which translates to a first year av erage occupancy of 16 or

673317 percent . At the beginning of year two, it experienced

6744approximately 43 percent occupancy.

674875. In contrast, Eighth Florida Ó s CON application project s

6759an 89 percent occupancy level by mont h 11. Based on Florida

6771Living Options Ó experience in Sarasota, the projection is

6780unreasonable. If Eighth Florida Ó s proposed facility fills at

6790the same rate as the Sarasota facility, year two of Eighth

6801Florida Ó s operation would result in a larger financial loss and

6813a greater need for working capital. Given that, Eight Florida Ó s

6825year two projected net i ncome would actually become a net loss,

6837and additional working capital would be needed. While Eighth

6846Florida Ó s expert, Mr. Jones, sought to distinguish the Sarasota

6857market from the Polk County market, nonetheless, it is relevant

6867to examine the occupancy l evel Florida Living Options was able

6878to achieve in connection with the opening of a new facility in

6890the Sarasota market.

689376. The financial feasibility of a skilled nursing

6901facility is an important consideration. Considering the issues

6909surrounding Eighth Florida Ó s fill rate at the end of year one,

6922construction period interest, and the erroneous Medicaid rate,

6930it appears likely that Eighth Florida would experience a year

6940two net loss , bring ing into question the long - term financial

6952feasibility of Eighth Florida Ó s CON application .

6961G. Section 408.035(1)(g): The extent to which the

6969proposal will foster competition that promotes quality and

6977cost - effectiveness

698077. I t stands to reason that approval of either

6990application will foster competition due to the fact that

6999additional nursing home beds with new amenities are proposed to

7009be added in Polk County . The extent of that competition,

7020however, is not evident , and the undersigned agrees with the

7030determination of AHCA on page 93 of its State Agency Action

7041Report submitted in this proceeding that Ð These projects are not

7052likely to have a material impact on competition to promote

7062quality and cost - effectiveness. Ñ

7068H . Section 408.035(1)(h): The costs and methods of the

7078proposed construction , including the costs and methods of

7086energy provision and the availability of alternative, less

7094costly, or more ef fective methods of construction

710278. The Florida Building Code (Building Code) governs the

7111design and construction of skilled nursing facilities. Under

7119the Building Code, a skilled nursing facility may be designed

7129based on either an Ð institutional Ñ design model or a Ð household Ñ

7143design model. To obtain AHCA Ó s approval of a proposed SNF, AHCA

7156requires parties to designate which design model has been

7165selected.

716679. An institutional design model involves centralized

7173services. By contrast, the household design model involves

7181decentralized services contained within a Ð neighborhood Ñ or

7190unit.

719180. Section 420.3.2.2 of the Building Code regulates the

7200household design model, and requires that dinin g activity in

7210social areas be decentralized and included within the resident

7219household. Section 420.3.2.2.1 further provides that Ð each

7227reside nt household (unit) shall be limited to a maximum of

723820 residents. Ñ Additionally, s ection 420.3.2.2.2 requires that

7247two individual households be grouped into a distinct

7255neighborhood with a maximum of 40 residents who may share the

7266required residential cor e areas.

727181. Lakeland Oaks Ó architectural expert, Bo Russ, and his

7281firm, Architectural Concepts, created the schematic design used

7289in Lakeland Oaks Ó CON application. In addition, Mr. Russ and

7300Architectural Concepts provided cost estimates, systems

7306descriptions, and the construction timeline for the project.

7314Architectural Concepts has worked with Greystone in the

7322development of other skilled nursing facilities in Florida,

7330including the design and construction of The Club Villages, The

7340Club at Ocala, and The Club at Kendall.

734882. The design of The Club Villages is based on a

7359hospitality model (i.e., the resident - c entered culture change

7369model). The social and dining areas of The Club Villages are

7380located within indivi dual neighborhoods. Each neighborhood has

7388a private dining room. Patient rooms surround the dining area.

7398The Club Villages includes a Bistro Restaurant located at the

7408center of the facility for family members and guests. The Club

7419Villages also has spac e for the provision of rehabilitation

7429services, including two large gyms within the physical therapy

7438suite. The facility has skylights throughout the structure and

7447other features to retain residential elements.

745383. In preparing the architectural design f or Lakeland

7462Oaks Ó proposal, Architectural Concepts incorporated certain

7469aspects of the design of The Club Villages. The Lakeland Oaks

7480design is based on the Ð institutional model, Ñ but with certain

7492embellishments intended to give the facility a Ð household, Ñ

7502residential feel. The proposed Lakeland Oaks facility is

7510approximately 84,000 sq uare feet. The facility has 10 - foot

7522ceilings, a residential - oriented interior design, residential

7530lighting, residential furniture, a large porte cochere, a lobby

7539area simil ar to The Club Villages, a Bistro, a central dining

7551area within the community that is divided into four dining rooms

7562with unique interior vernacular, a movie theater, a satellite

7571therapy gym, offices for staffing, a separate Activities of

7580Daily Living suit e, a doctors lounge, and three nursing units.

759184. With regard to physical therapy services, the proposed

7600Lakeland Oaks facility will include two large gyms at the center

7611of the therapy suite, a private outpatient therapy entrance, a

7621large classroom, and s pace for other ancillary services. The

7631design will allow for a concierge approach to therapy to treat

7642patients in need of those services. The proposed Lakeland Oaks

7652facility is reasonably and appropriately designed for use as a

7662skilled nursing facility, and promotes high quality of care.

767185. In developing the design of the facility, Mr. Russ

7681considered the fact that Lakeland Oaks proposes to offer both

7691short - term and long - term care.

769986. Greystone has developed two similar skilled nursing

7707facilities, The Club at Kendall, a 150 - bed skilled nursing

7718facility, and The Club at Ocala, a 154 - bed facility, both of

7731which are similar in design to Lakeland Oaks. Greystone has

7741received AHCA approval of the design and construction for both

7751of those facilities.

775487. Lakeland Oaks Ó proposed construction costs are

7762$17,289,054, or $185 per square foot. The estimated

7772construction costs are based on similar projects, including The

7781Club at Ocala at $178 pe r square foot. The construction costs

7793are reasonable and appropriate.

779788. The architectural plan, design, and features presented

7805by Lakeland Oaks satisfy the architectural criteria applicable

7813to skilled nursing facilities in Florida. The facility compl ies

7823with all applicable construction, design, and life safety code

7832requirements.

783389. Lakeland Oaks also presented a reasonable timeline for

7842completion of the project. The timeline is based on Greystone Ó s

7854prior experience in constructing similar skilled nursing

7861facilities.

786290. Mr. Russ reviewed Eighth Florida Ó s architectural plans

7872and schematics for conformity with applicable criteria. Eighth

7880Florida Ó s architectural plans and schematics were prepared by

7890Bessolo Design Group ( Bessolo Group ). Because of design flaws

7901inconsistent with the Building Code, the architectural plans and

7910design proposed by Eighth Florida and Bessolo Group should not

7920be approved by AHCA.

792491. Eighth Florida Ó s proposed design will be reviewed by

7935AHCA based on the p rovisions governing the institutional design

7945model. The design fails to meet certain distance requirements

7954found in the Building Code provisions gov erning an institutional

7964design. Speci fically, Florida Building Code s ection 420.3.2.1.2

7973(n ow renumbered as Building Code s ection 450.3.2.1.2) provides

7983that the travel distance from the entrance door of the farthest

7994patient room to the nurse Ó s station cannot exceed 150 feet. In

8007addition, the distance from a patient room to a clean utility

8018and soiled utility ro om cannot exceed 150 feet. Based on the

8030schematic plan presented by Eighth Florida and Bessolo Group ,

8039the distance from the most remote patient room to the nurse Ó s

8052station well exceeds 150 feet. In addition, the distance from

8062the most remote patient room to the soiled/utility rooms well

8072exceeds 150 feet. These flaws cannot be remedied without

8081substantial design changes .

808592. In addition , the Eighth Florida/ Bessolo Group design

8094includes deficiencies related to smoke compartments, nourishment

8101stations , an d other items. These m ore minor flaws can be

8113remedied without substantial changes.

811793. However, as to the 150 - foot limit, Eighth Florida Ó s

8130non - compliance makes the design a failed model. The facility

8141cannot be approved in its current design. In order to be

8152approvable, the facility would need to undergo a major redesign,

8162including a change in the size and configuration of the

8172building. This, in turn, would impact all of the financial

8182assumptions contained in Eighth Florida Ó s CON application.

819194. In response to Mr. Russ Ó opinions, Eighth Florida Ó s

8203architectural expert, Kevin Bessolo, contended that the

8210deficiencies related to the 150 - feet distances from the patient

8221room to the nurses station and soiled/clean utility areas were

8231not fatal because the p lan was based upon the Ð household model . Ñ

824695. Mr. Besselo acknowledged that, if the design is

8255considered to be Ð institutional , Ñ then the travel distances

8265would exceed the 150 - foot distance requirements. Mr. Besselo

8275also acknowledged that a skilled nurs ing facility can either be

8286an institutional design model or a household design model, but

8296not both. Mr. Bessolo further acknowledged that his position

8305that the plan is approvable is contingent upon the design being

8316considered under the household design mo del in accordance with

8326the Building Code. Mr. Bessolo disagreed with the criticism

8335offere d by Mr. Russ regarding the 150 - feet distance requirements

8347because he contended that his design presents a household model.

835796. Eighth Florida Ó s schematic design , however, does not

8367comply with the Building Code Ó s requirements for a household

8378design model. Eighth Florida Ó s proposed building is divided

8388into 30 - bed neighborhoods that exceed the Building Code Ó s 20 - bed

8403maximum for the household design. In addition, Eig hth Florida Ó s

8415plan presents three households sharing a central services area .

8425Finally, the dining area presented in the Eighth Florida plan is

8436centralized, rather than decentralized as required for the

8444household design model. Because the proposal does no t qualify

8454as a household model, AHCA should review it under the

8464institutional plan provisions.

846797. In turn, Mr. Bessolo offered criticisms of Lakeland

8476Oaks Ó proposed architectural plan. These included issues

8484related to the distance to soiled utility exce eding 150 feet,

8495resident storage areas, central bathing area, no emergency food

8504storage, smoke compartment issues, secondary exit issues, and

8512the planned movie theater. However, unlike Eighth Florida Ó s

8522major deficiencies related to the 150 - f oo t distant li mits from

8536the nurse Ó s station and from the clean and soiled utility rooms,

8549the criticisms offered by Mr. Bessolo are easily rectifiable by

8559Lakeland Oaks without substantial change .

8565I. Section 408.035(1)(i): The applicant Ó s past and

8574proposed provision of health care services to Medicaid

8582pati ents and the medically indigent

858898. Greystone has a strong history of serving Medicaid

8597patients in Florida. On a company - wide basis, 53.65 percent of

8609all patient days in Greystone SNFs were provided to Medicaid

8619pa tients during calendar year 2014.

862599. Lakeland Oaks plans to treat Medicaid patients at its

8635proposed facility. In its second year of operation, Lakeland

8644Oaks projects that almost 30 percent of its patient days will be

8656Medicaid days. Additionally, if Ð d ual eligibles Ñ (i.e.,

8666patients with Medicare as a primary payer but also eligible for

8677Medicaid) are taken into account, Lakeland Oaks Ó provision of

8687services to Medicaid patients will be even higher. Lakeland

8696Oaks Ó payor mix assumptions were based on Greystone Ó s actual

8708experience at comparable SNFs in Florida and are reasonable.

8717100. Eighth Florida projects in its second year of

8726op eration that approximately 40 percent of its patie nt days will

8738be Medicaid days. As previously explained, t hat proje ction is

8749questionable . The evidence at hearing showed that Hawthorne -

8759Sarasota, the facility upon which Eighth Florida Ó s proposal is

8770ba sed, had only eight percent Medicaid utilization after one and

8781a half years of operation.

8786IV. Factual Summary

8789101. The facts set forth above demonstrate that Greystone

8798has proposed a well - funded, financially feasible, well - designed

8809skilled nursing facility that will improve Polk County access to

8819short term and long term skilled nursing care for residents of

8830Polk County . Greystone has demonstrated a proven record of

8840providing high quality of care and the ability to assure quality

8851of care for the Lakeland Oaks proposal. In contrast, Eighth

8861Florida Ó s application was largely focused on improvi ng access to

8873those services within a certain zip code and for residents of

8884the Hawthorne Village community and not residents of Polk County

8894as a whole.

8897102. Greystone, Lakeland Oaks Ó parent company, has a long,

8907well - established history of providing high q uality care at over

8919two dozen skilled nursing facilities in Florida. On the other

8929hand , Florida Living Options, Eighth Florida Ó s parent, only

8939operates three skilled nursing facilities in Florida and does

8948not have as extensive of a track record in providin g high

8960quality care.

8962103. Moreover, Greystone has a well - established history of

8972providing skilled nursing services to a large volume of Medicaid

8982patients. On a company - w ide basis, over 50 percent of

8994Greystone Ó s patient days consist of Medicaid patients .

9004Conversely, Hawthorne - Sarasota, the facility upon which Eighth

9013Florida Ó s proposed project is bas ed, had only eight percent

9025Medicaid utilization in its first year and a half of operation,

9036calling into question Eighth Florida Ó s projection of 40 percent

9047Medicaid utilization in its app l ication.

9054104. Further, Eighth Florida has proposed to build a

9063nursing home with questionable inter - company financing and

9072uncertain financial feasibility. Eighth Florida Ó s facility

9080design does not meet code requirements and is unlikely to be

9091a pproved as proposed without substantial changes .

9099105. Considering both applications and the facts submitted

9107at the final hearing as outlined above, it is found that

9118Lakeland Oaks Ó CON application, on balance, best satisfies the

9128applica ble statutory and rule criteria.

9134CONCLUSIONS OF LAW

9137106. The Division of Administrative Hearings has

9144jurisdiction over the parties to, and the subject matter of,

9154these proceedings. See §§ 120.569, 120.57(1) and 408.039(5),

9162Fla. Stat.

9164107. The petitions in this case commenced a de novo

9174proceeding intended to formulate final agency action, Ð not to

9184review action taken earlier and preliminarily. Ñ Fla. Dep Ó t of

9196Trans p . v . J.W.C. Co. , 396 So. 2d 778, 786 - 87 (Fla. 1st DCA

92131981)(citing McDonald v. Dep Ó t of Banking and Fin. , 346 So. 2d

9226569 (Fla. 1st DCA 1977)); § 120.57(1), Fla. Stat. Each

9236applicant for a CON has the burden of demonstrating that its

9247application should be approved. Boca Raton Artificial Kidney

9255Ctr. v. Dep Ó t of HRS , 475 So. 2d 250 (Fla. 1st DCA 1985).

9270108. Amendments to CON applications are prohibited by both

9279rule and Florida decisional law. See Fla. Admin. Code Rule 59C -

92911.010(3)(b) ; Gulf Court Nursing Ctr. v. Dep Ó t of Health and

9303Human Servs. , 483 So. 2d 700, 707 (Fla. 1st DCA 1986).

9314Substantial changes to CON application s are not permitted.

9323Manor Care, Inc. (Sarasota), and Health Quest Corp. v. Dep Ó t of

9336HRS , 558 So. 2d 26 (Fla. 1st DCA 1989). Ð As to matters within

9350an applicant Ó s control, significant changes to a complet ed

9361application are not permitted. Ñ Id. at 29. In Manor Care , the

9373Court held that changing from a three - bed - per - room facility to a

9389two - bed - per - room facility was a prohibited amendment because the

9403change was substantial and within the control of the applic ant.

9414Thus, any attempts to explain away architectural and financial

9423concerns by offering alternative proposals that substantially

9430amend Eighth Florida Ó s application are prohibited.

9438109. The decision over which of the two applications

9447should be approved o r denied for a CON must be based upon a

9461balanced consideration of applicable statutory and rule

9468criteria. Dep Ó t of HRS v. Johnson and Johnson Home Healthcare,

9480Inc. , 447 So. 2d 361 (Fla. 1st DCA 1984); Balsam v. Dep Ó t of

9495HRS , 486 So. 2d 1315 (Fla. 1st DCA 1988). The weight to be

9508given to each criterion is not fixed, but instead varies

9518depending on the facts of each case. Collier Medical Ctr., Inc.

9529v. Dep Ó t of HRS , 462 So. 2d 83 (Fla. 1st DCA 1985).

9543110. In this case, the need for ad ditional community

9553nursing home beds in Nursing Home Subdistrict 6 - 5, Polk County

9565is undisputed. The parties have stipu lated that the applicable

9575fixed - need pool consists of 120 remaining beds. Both Lakeland

9586Oaks and Eighth Florida seek to establish nursi ng home beds with

9598exactly 120 beds, so the question presented in this proceeding

9608is which of the two applicants best meets applicable review

9618criteria.

9619111. Upon weighing and balancing all applicable criteria,

9627Lakeland Oaks Ó application is superior. Alt hough all criteria

9637were weighed, persuasive criteria include the superior quality

9645of care offered at Greystone Ó s existing nursing homes in

9656Florida, the superior architectural design and equipping of the

9665Lakeland Oaks proposed facility, Lakeland Oaks Ó more reliable

9674assurances of financial feasibility, and service to all

9682residents in need of skilled nursing services in Polk County .

9693All these criteria weigh in favor of approval of Lakeland Oaks Ó

9705application over Eighth Florida Ó s proposal.

9712RECOMMENDATION

9713Based on the foregoing Findings of Fact and Conclusions of

9723Law, it is RECOMMENDED that the Agency for Health Care

9733Administration enter a final order approving Lakeland Oaks NH,

9742LLC Ó s CON Application No. 10309 and denying Eighth Florida

9753Living Options, LLC Ó s CON Application No. 10303.

9762DONE AND ENTERE D this 22nd day of February , 2016, in

9773Tallahassee, Leon County, Florida.

9777S

9778JAMES H. PETERSON, III

9782Administrative Law Judge

9785Division of Administrative Hearings

9789The Desoto Building

97921230 Apalachee Parkway

9795Tallahassee, Florida32399 - 3060

9799www.doah.state.fl.us

9800Filed with the Clerk of the

9806Division of Administrative Hearings

9810this 22nd day of February , 201 6 .

9818ENDNOTE

98191/ All statutory and rule references are to current versions .

9830COPIES FURNISHED :

9833Richard Joseph Saliba, Esquire

9837Agency for Health Care Administration

98422727 Mahan Drive , Mail Stop 3

9848Tallahassee, Florida 32308

9851(eServed)

9852Jay Adams, Esquire

9855Broad and Cassel

9858Suite 400

9860215 South Monroe Street

9864Tallahassee, Florida 32301

9867(eServed)

9868Frank P. Rainer, Esquire

9872Broad and Cassel

9875Suite 400

9877215 South Monroe Street

9881Tallahassee, Florida 32301

9884(eServed)

9885Seann M. Frazier, Esquire

9889Parker, Hudson, Rainer and Dobbs, LLP

9895Suite 750

9897215 South Monroe Street

9901Tallahassee, Florida 32301

9904(eServed)

9905Jonathan L. Rue, Esquire

9909Parker, Hudson, Rainer

9912and Dobbs, LLC

9915Suite 3600

9917303 Peachtree Street , Northeast

9921Atlanta, Georgia 30308

9924(eServed)

9925K evin Michael Marker, Esquire

9930Agency for Health Care Administration

99352727 Mahan Drive , Mail Stop 3

9941Tallahassee, Florida 3230 8

9945(eServed)

9946Richard J. Shoop, Agency Clerk

9951Agency for Health Care Administration

99562727 Mahan Drive, Mail Stop 3

9962Tallahassee, Florida 32308

9965(eServed)

9966Elizabeth Dudek, Secretary

9969Agency for Health Care Administration

99742727 Mahan Drive, Mail Stop 1

9980Tallahassee, Florida 32308

9983(eServed)

9984Stuart Williams, General Counsel

9988Agency for Health Care Administration

99932727 Mahan Drive, Mail Stop 3

9999Tallahassee, Florida 32308

10002(eServed)

10003NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

10009All parties have the right to submit written exceptions within

1001915 days from the date of this Recommended Order. Any exceptions

10030to this Recommended Order should be filed with the agency that

10041will issue the Final Order in this case.

Select the PDF icon to view the document.
PDF
Date
Proceedings
PDF:
Date: 04/28/2016
Proceedings: Agency Final Order filed.
PDF:
Date: 04/13/2016
Proceedings: Agency Final Order
PDF:
Date: 02/22/2016
Proceedings: Recommended Order
PDF:
Date: 02/22/2016
Proceedings: Recommended Order cover letter identifying the hearing record referred to the Agency.
PDF:
Date: 02/22/2016
Proceedings: Recommended Order (hearing held October 27 through 29, and November 2, 5, and 10, 2015). CASE CLOSED.
PDF:
Date: 02/01/2016
Proceedings: Notice of Agency Adoption of the Proposed Recommended Order Submitted by Lakeland Oaks NH, LLC filed.
PDF:
Date: 02/01/2016
Proceedings: Lakeland Oaks NH, LLC's Proposed Recommended Order filed.
PDF:
Date: 02/01/2016
Proceedings: Eighth Florida Living Options' Proposed Recommended Order filed.
PDF:
Date: 01/12/2016
Proceedings: Order Granting Extension of Time.
PDF:
Date: 01/11/2016
Proceedings: Eighth Florida Living Options, LLC's Motion to Extend Time for Filing Proposed Recommended Orders filed.
Date: 11/23/2015
Proceedings: Transcript of Proceedings (not available for viewing) filed.
Date: 10/27/2015
Proceedings: CASE STATUS: Hearing Held.
PDF:
Date: 10/26/2015
Proceedings: Prehearing Stipulation filed.
PDF:
Date: 10/26/2015
Proceedings: Notice of Appearance of Counsel (Kevin Marker) filed.
PDF:
Date: 10/14/2015
Proceedings: Notice of Telephonic Status Conference (status conference set for October 20, 2015; 10:00 a.m.).
PDF:
Date: 10/05/2015
Proceedings: Notice of Taking Deposition Duces Tecum (of Kevin Bessolo) filed.
PDF:
Date: 10/02/2015
Proceedings: Notice of Taking Deposition Duces Tecum (of Marisol Fitch) filed.
PDF:
Date: 09/25/2015
Proceedings: Notice of Taking Deposition Duces Tecum (of Steve Jones) filed.
PDF:
Date: 09/25/2015
Proceedings: Notice of Taking Deposition Duces Tecum (of Sharon Gordon-Girvin) filed.
PDF:
Date: 09/25/2015
Proceedings: Notice of Appearance filed.
PDF:
Date: 09/25/2015
Proceedings: Eighth Florida Living Options, LLC's Amended Notice of Taking Deposition (of Mark Miller and Robert Hill) filed.
PDF:
Date: 09/17/2015
Proceedings: Order Granting Continuance and Re-scheduling Hearing (hearing set for October 27 through 29, November 2, 5 and 10, 2015; 9:00 a.m.; Tallahassee, FL).
PDF:
Date: 09/14/2015
Proceedings: Eighth Florida Living Options, LLC's Motion to Reschedule Final Hearing filed.
PDF:
Date: 09/14/2015
Proceedings: Notice of Serving Lakeland Oaks NH, LLC's Answers and Objections to Eighth Florida Living Options, LLC's First Interrogatories filed.
PDF:
Date: 09/14/2015
Proceedings: Lakeland Oaks NH, LLC's Responses and Objections to Eighth Florida Living Options, LLC's First Request for Production filed.
PDF:
Date: 09/08/2015
Proceedings: Eighth Florida Living Options, LLC's Notice of Taking Deposition of Mark Miller and Robert Hill) filed.
PDF:
Date: 08/21/2015
Proceedings: Notice of Taking Deposition of D Franklin, K Broom and K Edel filed.
PDF:
Date: 08/13/2015
Proceedings: Eighth Florida Living Options, LLC's Notice of Service of Interrogatories filed.
PDF:
Date: 08/13/2015
Proceedings: Eighth Florida Living Options, LLC's First Request for Production from Lakeland Oaks NH, LLC, filed.
PDF:
Date: 08/10/2015
Proceedings: Response to the Agencys First Request for Production filed.
PDF:
Date: 07/16/2015
Proceedings: Notice of Cancellation of October 2, 2015, Hearing Date.
PDF:
Date: 07/14/2015
Proceedings: Agency's Response to Request for Production filed.
PDF:
Date: 07/14/2015
Proceedings: The Agency for Health Care Administration's Notice of Service of Responses to Eighth Florida Living Options, LLC's First Set of Interrogatories filed.
PDF:
Date: 07/10/2015
Proceedings: Lakeland Oaks NH, LLC's Final Witness List filed.
PDF:
Date: 07/10/2015
Proceedings: Eighth Florida Living Options, LLC's Final Witness List filed.
PDF:
Date: 07/02/2015
Proceedings: Lakeland Oaks NH, LLC's Preliminary Witness List filed.
PDF:
Date: 07/01/2015
Proceedings: Agency First Request for Production to Eighth Florida Living Options, LLC, filed.
PDF:
Date: 06/30/2015
Proceedings: Eighth Florida Living Options First Request for Production of Documents from Agency for Health Care Administration filed.
PDF:
Date: 06/29/2015
Proceedings: Eighth Florida Living Options Notice of Service of its First Set of Interrogatories to Agency for Health Care Administration filed.
PDF:
Date: 06/19/2015
Proceedings: Eighth Florida Living Options' Notice of Service of Discovery Responses filed.
PDF:
Date: 06/19/2015
Proceedings: Eighth Florida Living Options' Preliminary Witness List filed.
PDF:
Date: 06/01/2015
Proceedings: Order of Pre-hearing Instructions.
PDF:
Date: 05/27/2015
Proceedings: Joint Notice of Filing Order of Pre-hearing Instructions filed.
PDF:
Date: 05/07/2015
Proceedings: Notice of Retaining Court Reporter filed.
PDF:
Date: 05/07/2015
Proceedings: The Agency for Health Care Administration's Preliminary and Final Witness List filed.
PDF:
Date: 05/07/2015
Proceedings: Notice of Hearing (hearing set for September 29 through October 2 and 6 through 9, 2015; 9:00 a.m.; Tallahassee, FL).
PDF:
Date: 05/07/2015
Proceedings: Order of Consolidation (DOAH Case Nos. 15-1897CON and 15-1903CON).
PDF:
Date: 05/04/2015
Proceedings: Lakeland Oaks NH LLC's First Request for Production of Documents to Eighth Florida Living Options, LLC filed.
PDF:
Date: 05/04/2015
Proceedings: Notice of Serving Lakeland Oaks NH LLC's First Interrogatories to Eighth Florida Living Options, LLC filed.
PDF:
Date: 04/27/2015
Proceedings: Joint Response to Initial Order filed.
PDF:
Date: 04/24/2015
Proceedings: Lakeland Oaks NH LLC's Partial Voluntary Dismissal as to CON Applications 10305 and 10308 Only filed.
PDF:
Date: 04/17/2015
Proceedings: (Agency's) Response to Initial Order filed.
PDF:
Date: 04/16/2015
Proceedings: Notice of Transfer.
PDF:
Date: 04/15/2015
Proceedings: Notice of Appearance (Karen Putnal) filed.
PDF:
Date: 04/09/2015
Proceedings: Initial Order.
PDF:
Date: 04/08/2015
Proceedings: Decisions on Batched Applications filed.
PDF:
Date: 04/08/2015
Proceedings: Lakeland Oaks NH LLC's Cross-Petition Challenging Co-batched Applicants filed.
PDF:
Date: 04/08/2015
Proceedings: Notice (of Agency referral) filed.

Case Information

Judge:
JAMES H. PETERSON, III
Date Filed:
04/08/2015
Date Assignment:
04/16/2015
Last Docket Entry:
04/28/2016
Location:
Tallahassee, Florida
District:
Northern
Agency:
Other
Suffix:
CON
 

Counsels

Related Florida Statute(s) (4):