87-002151 Home Health Care Of Bay County Florida, Inc. vs. Department Of Health And Rehabilitative Services Status: Closed Recommended Order on Thursday, December 17, 1987.

Summary: Incipient policy. HRS standard requiring applicant to affirmatively show unmet need, unavailability of services or inaccessibility is arbitrary

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HOME HEALTH CARE OF BAY )

COUNTY, FLORIDA, INC. , )

)

Petitioner , )

)

vs. ) CASE NO. 87-2151

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES , )

)

Respondent. )

______________________________)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held on September 11, 1987, in

Panama City, Florida, and on September 21, 1987, in Tallahassee, Florida, before

the Division of Administrative Hearings, by its designated Hearing Officer,

Diane K. Kiesling.

APPEARANCES

For Petitioner : Bryon B. Mathews, Jr., Esquire

Vicki Gordon Kaufman, Esquire

McDermott, Will and Emory

101 N. Monroe Street, Suite 1090

Tallahassee, Florida 32301

For Respondent : Theodore E. Mack, Esquire

Assistant General Counsel

Department of Health and

Rehabilitative Services

Regulation & Health Facilities

Ft. Knox Executive Center

2727 Mahan Drive

Tallahassee, Florida 32308

ISSUES

The issue is whether Petitioner, Home Health of Bay County, Florida, Inc.,

(Home Health Care of Bay) is entitled to a certificate of Need to establish a

Medicare-certified home health agency in Bay County, Florida.

Home Health Care of Bay presented the testimony of Mark Ehrman, M.D., Marta

Hardy, and Deborah S. Kolb, Ph.D. Home Health Care of Bay's Exhibits 1, 2, 3,

3A, 3B, 3C, 4A, 4B, 5, 9-12, 18, and 20 were admitted in evidence. The

Department of Health and Rehabilitative Services (DHRS) presented the testimony

of Joyce Farr, David Carter, Laura Young, R.N., and Anne Parmer. Home Health

Care of Bay recalled Dr. Ehrman and Dr. Kolb on rebuttal.

The parties filed proposed findings of fact and conclusions of law. All

proposed findings of fact have been considered and a specific ruling has been

made on each proposed finding of fact in the Appendix attached hereto and made a

part of this Recommended Order.

FINDINGS OF FACT

1. This proceeding involves certificate of need (CON) application No. 4912

by Home Health Care of Bay to establish a Medicare-certified home health agency

to serve Bay County Florida.

2. Home Health Care of Bay's CON application was timely filed on December

15, 1986. Home Health Care of Bay's application was deemed complete on March 2,

1987.

3. On April 30, 1987, DHRS preliminarily denied Home Health Care of Bay's

CON application based on a determination that:

There was no need demonstrated by Home Health

Care of Bay for an additional home health

agency in Bay County.

4. Home Health Care of Bay is owned by Mark Ehrman , M.D. Dr. Ehrman is a

board-certified internist, hematologist, and oncologist. Dr. Ehrman has been in

private practice in Fort Walton Beach, Florida, since November, 1984. Prior to

1984, Dr. Ehrman was involved in the organization and delivery of medical

services, the teaching of medicine, and the practice of medicine in Canada.

5. Home Health Care of Bay will serve all patients regardless of race,

income, sex, ethnic background, religion, or physical handicap.

6. Home Health Care of Bay will provide 3 percent Medicaid and 3 percent

indigent home health visits.

7. Dr. Ehrman, both in his office and in his durable medical equipment

(DME) company, goes to great lengths to ensure that indigent persons receive

medical services.

8. Dr. Ehrman, in his office practice, provides medical services to all

persons regardless of their ability to pay. He is a participating physician in

Medicare, Medicaid, and other insurance programs. Dr. Ehrman's participation in

these programs and his determination not to screen patients financially has

increase access to medically underserved patients. Dr. Ehrman's private

practice includes approximately 5 percent Medicaid patients.

9. In the past, home health agencies have tended to focus on acute medical

problems. The traditional model for home health care has been to shorten an

acute hospital stay for a discrete problem. Even chronically ill patients still

came to the hospital when they had an acute episode. There has been little

focus on avoiding hospitalization.

10. There is now a shift in home health care which attempts to avoid

hospitalization in appropriate cases. Dr. Ehrman, in treating patients at home,

has become involved with sophisticated triage procedures, home pain management,

and other procedures which maximize a patient's time outside the hospital. Such

procedures allow patients to remain safely and comfortably in their homes.

11. Procedures which can be safely done in the home include the starting

of I/V morphine drips or I/V antibiotics. These procedures have traditionally

not been done in the home.

12. Nationally, and in Bay County, several factors are causing a shift to

home health use. First, pressure is being applied in the form of reimbursement

mechanisms to reduce the expense of institutional care. Patients are discharged

from the hospital sooner and there is more pressure to use home health services.

13. Second, an increased incidence of chronic illnesses, such as AIDS,

will increase the use of home health services. The incidence of AIDS and AIDS

related diseases will continue to increase and has obvious implications for

increased home health usage. Home health care will make "hospital-like" care

more available and less expensive for AIDS patients.

14. Third, health consumers want to maintain the quality of their lives

and remain at home as long as possible.

HOME HEALTH CARE OF BAY'S PROPOSAL

15. Home Health Care of Bay will provide medical personnel services in the

disciplines of registered nursing, certified home health aides, occupational

therapy, speech therapy, physical therapy, and medical/social work.

16. These services will be provided to Medicare, private insurance, and

indigent patients.

17. Home Health Care of Bay will provide traditional home health services

and many "high-tech" services which currently are not available at all or are

not routinely done in Bay County. Such services include the transfusion of

blood and blood products, professional pain management, the drawing of arterial

blood gases, the care of Groshong and Hickman catheters, and the care of

subcutaneous pumps and subcutaneous venous access devices.

18. Home Health Care of Bay's proposed services will be utilized by many

different types of patients, including renal patients, chronic pulmonary

patients, chronic heart disease patients, and cancer patients.

19. Home Health Care of Bay will provide health care services to AIDS

patients.

20. Petitioner's Exhibit 5 contains a complete list of services which Home

Health Care of Bay will provide.

21. Home Health Care of Bay's services will be available 24 hours a day, 7

days a week. This is an important commitment because home health care patients

need services regardless of the time of day or day of the week.

22. Even more important than the discrete list of services that Home

Health Care of Bay will provide is the integration of all these services into

one agency. In that way, patients are not shuttled from place to place ; their

care can be organized and integrated for maximum benefit. This integration will

be accomplished by formulation of a plan of therapy which will include

evaluation by a social worker and a physician in order to deal with the

patient's total needs.

23. Home Health Care of Bay's commitment to a total integration of patient

services is evidenced by its plan to provide 4 percent of its visits in the

medical/social work category. Such services are important in providing

comprehensive care.

24. The provision of medical/social work services will help patients and

their families identify both medical and non- medical needs. Once such needs

are identified, the patients and families can be channeled to the appropriate

services, agencies and resources.

25. Home Health Care of Bay will provide the physician with direct and

timely communication about the patient. This will include daily delivery of

complete medical records. Such a service is crucial in order to provide home

care to patients with complicated problems.

26. Home Health Care of Bay has a budget line item for marketing of

$21,000 in the first year and $18,000 in the second year of operation. This

money will be used to change the perception and pattern of home health use.

Patients and doctors will be made aware of the availability of new home health

services and the integration of those services with existing services.

27. Home Health Care of Bay's marketing effort will overcome the

reluctance of some physicians to utilize home health services.

28. The demographics of the subdistrict of Bay County were analyzed and

compared to the demographics of District II. The analysis shows that from 1986

to 1989, 3,076 persons 65 and over will be added to the population of Bay

County. This represents a growth rate of 21.5 percent in Bay County compared to

a district growth rate of 12.4 percent.

29. Of the elderly growth in District II of 7,355, approximately 40

percent of such growth is occurring in Bay County. Forty percent (40 percent)

is a high percentage in a 14 county district and indicates that the elderly

population in Bay County is growing at a very rapid rate.

30. Elderly persons are the most frequent users of home health services.

Thus, rapid population growth is occurring in the segment of the population most

in need of home health services.

STATUTORY CRITERIA 1/

Consistency With State Health Plan

31. Home Health Care of Bay`s proposal was reviewed for conformity with

the State Health Plan and is consistent with that plan.

32. The 1985-1987 Florida State Health Plan states:

Home health agencies provide nursing, health

aid, therapy and other kinds of services to

patients in their homes. This allows

individuals to remain at home rather than use

more expensive institutional care to recover

from acute illness or to manage chronic

conditions.

33. The State Health Plan further states:

Home health services can be a cost effective

form of long term care for the elderly and

the infirm.

34. The provision of home health services proposed by Home Health Care of

Bay will provide residents of Bay County with a lower cost alternative to

institutionalized long term care as referenced in the above State Health Plan

excerpts.

35. The State Health Plan also addresses the unwillingness of many

providers to serve the medically needy:

Medicare is the largest payor for home health

care to the elderly, though some private

insurers and Medicaid both cover home health

services. Policy makers are increasingly

concerned about providers' willingness to

serve Medicaid recipients and medically

indigent Floridians.

36. Home Health Care of Bay has committed to provide at least 3 percent

Medicaid and 3 percent indigent visits. Such a commitment will greatly increase

access of medically underserved groups.

37. Approval of a provider who accepts a significant portion of Medicaid

patients will encourage current providers to accept such patients in order to

retain their Medicare and private referrals. Physicians and discharge planners

are much more willing to refer to an agency that will care for all their

patients.

38. The State Health Plan contains the following objective:

OBJECTIVE 1.5 .: To assure that the number of

home health agencies in each service area

promote the greatest extent of competition

consistent with reasonable economies of scale

by 1987.

39. The methodology utilized by Home Health Care of Bay to project need

maximizes competition consistent with economies of scale by allowing additional

providers to enter the market while maintaining existing agencies at a size at

which they can operate efficiently.

Consistency With Local Health Plan

40. Home Health Care of Bay's proposal was reviewed in relation to the

1986 District Two Health Plan and is consistent with that plan.

41. The local health plan contains a section on long-term care services,

including home health services. This section contains a numerical methodology

to determine need. That methodology indicates a need for an additional agency

in Bay County.

42. The local health plan also contains priorities for home health

services. Priority C states that:

Priority will be given to home health

services applications who have a history of

providing, or will commit to provide,

services to Medicare, Medicaid and medically

indigent patients.

43. Dr. Ehrman, the owner of Home Health Care of Bay, has a record in his

practice of providing services to all payor groups. He has committed to

continue to do so in his home health agency.

44. Priority D of the Local Health Plan states:

Priority will be given to home health

services applicants who have a history of

providing, or will commit to provide, a

public marketing program for their services

which includes pamphlets, public service

announcement and various other community

awareness activities.

45. Home Health Care of Bay has budgeted for and committed to an extensive

marketing program.

46. A marketing priority is unusual in a local health plan and indicates

an awareness of the need to educate the public about home health services.

Determination Of Need

47. DHRS currently has no rule governing the need for home health

agencies.

48. A historical summary of the regulation of home health agencies in

Florida is described in a memorandum prepared by Ms. Marta V. Hardy.

49. Ms. Hardy was the Deputy Assistant Secretary for Regulation and Health

Facilities, DHRS, from September 1984 through June 1987. Ms. Hardy was

responsible for all CON decisions and was the ultimate decision-maker in regard

to the preliminary denial of Home Health Care of Bay's CON.

50. In the fall of 1984, DHRS attempted to promulgate a rule to replace

the invalidated Rule of 300. This proposed rule was based on a use rate

methodology, but was invalidated in a rule challenged proceeding in 1985.

51. After the invalidation of the proposed rule, DHRS implemented an

interim policy which it used to review home health agencies. This interim

policy is reflected in the "Bob Sharpe memo," dated May 15, 1986. The interim

policy was applied to home health agency application beginning with the first

batching cycle in 1986.

52. The interim policy utilized a variation of the previously invalidated

rule and attempted to correct the problems which caused the proposed rule to be

found invalid.

53. The interim policy is a use rate/population methodology which projects

the number of Medicare enrollees using home health services in the future. This

number is multiplied by the average number of visits per Medicare home health

user. The total number of visits is divided by an agency size of 9,000 visits

to yield the gross number of agencies needed. The total number of licensed and

approved agencies is subtracted from the gross need number to yield the net

number of agencies needs. The interim policy phased in the needed agencies over

a three year period.

54. DHRS defended the interim policy in circuit court when the Florida

Association of Home Health Agencies (FAHHA) sought to stop DHRS from using the

policy. DHRS defended the interim policy in December, 1986, before the First

District Court of Appeal.

55. Use of the interim policy resulted in the approval of 23 home health

agencies.

56. DHRS abandoned its interim policy sometime in the fall of 1986. No

notice was given to the public or to interested parties that a change in DHRS

policy had occurred. DHRS published no document rescinding the Sharpe memo.

57. Only after applications were filed in the second batching cycle of

1986, were applicants informed that DHRS had changed its interim policy .

58. Applicants in the December, 1986, batching cycle, including Home

Health Care of Bay, were asked for an unlimited extension of time within which

DHRS could render a decision.

59. Applicants who refused to agree to an extension were evaluated on the

basis of the "statutory need criteria." Applicants who did not agree to an

extension were denied.

60. In only one instance was a CON granted after abandonment of the

interim policy. This occurred in Franklin County, where no home health agency

existed at the time of that approval.

61. DHRS' new "policy" was not developed by DHRS health planners.

62. The "policy" put the burden of proof on the applicant to demonstrate

an unmet need. Such a demonstration would be difficult to make.

63. The Office of Community Medical Facilities, the office within DHRS

responsible for preliminary CON review, reviewed Home Health Care of Bay's

application using the "policy" based on "the thirteen statutory criteria." Such

a review required Home Health Care of Bay to prove need by demonstrating an

unmet need.

64. However, as evidenced by the Office of Community Medical Facilities'

review of Home Health Care of Bay's application, a policy requiring an applicant

to meet a negative burden of proof is unreasonable. It imposes a standard which

is virtually impossible for an applicant to meet.

65. Ms. Joyce Farr was the DHRS employee responsible for the review of

Home Health Care of Bay's application and for the development of the related

State Agency Action Report (SAAR). The SAAR was the only work product Ms. Farr

prepared in regard to Home Health Care of Bay's application.

66. Ms. Farr has never been qualified as an expert witness in the home

health area. Ms. Farr has no formal education in health planning and is

unfamiliar with Medicare reimbursement. Ms. Farr does not consider herself to

be an expert in financial feasibility projections, staffing, or quality of care.

67. Ms. Farr is not in a policy-making position at DHRS.

68. Ms. Farr was given no instructions by her superiors as to how to

review Home Health Care of Bay's application.

69. DHRS presented the testimony of Ms. Farr to attempt to explain how

Home Health Care of Bay's application was reviewed. Ms. Farr was tendered and

accepted, not as an expert health planner, but as an expert in "CON review."

70. Ms. Farr articulated the standard she used to determine need:

[I ]f an applicant or residents of a county

or community resources of a county or just

about any organization basically says that

there is an unmet need, meaning that there is

no home health services available or there is

an accessibility problem where certain groups

are not being served -- certain services are

not being offered -- I become aware of it by

their simply documenting, "I cannot get home

health services," like CAPS [Capitol Area

Community Aging Agency] that said, "They

aren't serving these people. We need

somebody in here to serve these people."

That would show that there was an unmet need.

71. Unless an applicant, or community resource, could demonstrate an

accessibility problem, no need existed according to Ms. Farr.

72. Ms. Farr did not review the Medicare cost reports of current providers

to determine the services they provided prior to recommending denial of Home

Health Care of Bay's application.

73. Ms. Farr reviewed utilization data of current providers for only one

year.

74. Ms. Farr did no analysis of the types of visits provided by existing

providers. Ms. Farr looked only at the total number of visits. The only

information Ms. Farr utilized in regard to the type of visits being provided was

information given to her by existing providers.

75. In determining that no need existed for medical/social work services,

Ms. Farr relied on the list of social service agencies included in the local

health plan, but did no analysis as to what services such agencies offered.

76. Ms. Farr determined that no Medicaid access problem existed in Bay

County based on information current providers gave her. She did not verify

these representations with the Medicaid office.

77. Ms. Farr did no charge comparison in her review.

78. At the time of her review, Ms. Farr did not know when a new competitor

last entered the market in Bay County.

79. Ms. Farr did not address Objective 1.5 of the State Health Plan in her

review. She was unaware of Objective 1.5 until it was pointed out to her in

deposition.

80. Ms. Farr utilized no planning horizon in determining need, though she

admitted that one of the purposes of CON review is to plan for future health

needs.

81. Ms. Farr's review of Home Health Care of Bay's application was

deficient for several reasons. First, Ms. Farr's review did not look at a

projection of future need. It did not analyze demographics or utilize a

planning horizon. It contains no elements of a needs analysis. A mere review

of what currently exists misses the point of health planning.

82. Second, in making a determination of no need, Ms. Farr relied solely

on comments of existing providers who told her that there was no need for a

competing agency.

83. Dr. Deborah Kolb, vice-president of Jennings, Ryan, Federa & Co.,

participated in the preparation of Home Health Care of Bay's CON application.

84. In preparing the needs assessment portion of the application, Dr. Kolb

reviewed the State Health Plan, the Local Health Plan, utilization data, home

health CON decisions, and services offered by current providers.

85. The need methodology which appears in Home Health Care of Bay's

application is contained in Dr. Kolb's expert report.

86. The methodology appearing in her report and the application was the

interim policy in use by DHRS at the time the application was filed. This was

the methodology in the Bob Sharpe memo.

87. Home Health Care of Bay will provide home health services to the

residents of Bay County.

88. Bay County is in DHRS Service District II. According to the 1986

District II Health Plan, District II is composed of 14 separate subdistricts.

Each subdistrict is composed of one county.

89. Bay County is a reasonable service area for Home Health Care of Bay.

90. Dr. Kolb utilized a two-year planning horizon to project the need for

home health agencies. This is a reasonable planning horizon.

91. Table 3 of Dr. Kolb's report analyzes need on a district-wide basis.

Two time frames, July, 1988, and January, 1989, are shown because Home Health

Care of Bay's application was filed in December, 1986. Two years from that date

would be December 1988. The official population projections from the Governor's

Office focus on July and January of each year. Use of the two project dates

straddles the December, 1988, planning horizon.

92. The population numbers of District II for 65 and over are 62,546 for

January, 1988, and 63,558 for January, 1989.

93. The 1984 Medicare use rate, which is an estimate of the number of

Medicare home health visits per elderly person in Florida for 1984, is

multiplied by the projected elderly population to arrive at a projected number

of visits.

94. The number of projected visits in Table 3 of 118,565 in July, 1988,

and 120,483 in January, 1989, is a result of multiplying the use rate by the

projected population.

95. To determine the number of agencies needed, the projected number of

visits is divided by optimal agency size. This calculation yields a gross

agency need of 13 agencies in the district in July, 1988, and January, 1989.

96. The number of licensed and approved agencies, 12, is subtracted from

gross need, 13, to yield net need of one (1) agency in July, 1988, and January,

1989.

97. Dr. Kolb utilized 9,000 for the optimal agency size figure. This is

consistent with the interim policy and with data which suggests that is where

economies of scale occur. An optimal agency size of 9,000 appears in the Local

Health Plan methodology.

98. Table 4 of Dr. Kolb's report presents the same analysis as Table 3,

described above, on a subdistrict basis to determine where the one agency found

to be needed in District II should be located.

99. Use of the same methodology results in a gross agency need of three.

The two existing agencies are subtracted from the gross need of three to yield a

net need for one agency in July, 1988, and January, 1989, in Bay County.

100. The methodology described above is a reasonable one for determining

need. The methodology utilizes a common health planning approach. It is the

same methodology used by DHRS as an interim policy. It is the same type of

methodology used by DHRS in planning for other types of health services.

101. Beyond the numerical analysis discussed above, other factors indicate

the need for an additional home health agency in Bay County.

102. Bay County has a very low home health use rate and a very high

nursing home use rate.

103. The Bay County home health use rate is 1.5 visits per person 65 years

and older. The Bay County use rate is significantly lower than the state use

rate of 1.89. This disparity indicates a gap between real need and historical

utilization.

104. At the same time, Bay County has a nursing home use rate of 41 beds

per thousand elderly compared to a state rate of 23 beds per thousand.

105. Additionally, the occupied nursing home beds per thousand elderly is

much greater in Bay County than in the state. In the state there are 21.3

occupied beds per thousand elderly. The utilization of Bay County's nursing

home beds is approximately 75 percent greater than utilization in the state as a

whole.

106. These statistics suggest an inappropriate allocation of resources

between home health care services and more expensive institutional nursing home

services.

107. Nursing home utilization would decrease with more sophisticated home

health care. Many people are inappropriately institutionalized in nursing homes

and could be cared for at home.

108. From a medical perspective, Dr. Ehrman was of the opinion that an

additional home health agency was needed.

Availability, Quality Of Care, Efficiency, Appropriateness,

Accessibility, Extent Of Utilization, And Adequacy Of Like And

Existing Services

109. There are currently two Medicare-certified home health care agencies

serving Bay County.

110. One way to evaluate agency performance is to analyze the mix of

services and the number and types of visits being provided. Current providers

have concentrated heavily on providing nursing and aide visits. Of

approximately 18,000 visits provided each year, approximately 16,000 visits

comprised the nursing and aide categories. Neither provider did any

specifically medical/social work visits in 1985 or 1986.

111. Additionally, the total number of visits delivered to the residents

of Bay County has remained constant in 1985 and 1986. Bay County's constant use

rate illustrates the need for more education in regard to home health services.

112. While current providers do certain high tech procedures if directed

to by a doctor, current providers are not committed to consistently doing high

tech procedures. High tech services are not the most profitable. Their margins

are often low and it is more economically beneficial for current providers to

provide aide servicesansfusions, initiation of I/V antibiotics, continuous

infusion of morphine, pain nursing, and catheter care are all services which

existing agencies have rarely done or do with great difficulty. Without doing

such procedures as a regular basis, competency is difficult to maintain.

113. Bay Home Health Care Agency d/b/a Home Health of Panama City (Home

Health of Panama City) is a free-standing home health agency and has been in

business for 11 1/2 years. Home Health of Panama City does no Medicaid visits.

Bay Medical Center Home Health receives referrals from Home Health of Panama

City because Home Health of Panama City does not take Medicaid or indigent

patients. Home Health of Panama City does no medical/social work visits.

114. Home Health of Panama City has no money budgeted for marketing.

115. Bay Medical Center Home Health is a hospital based home health

agency. It functions as a department of Bay Medical Center, an acute care

hospital located in Panama City, Florida.

116. In the past two years, Bay Medical Center Home Health has provided no

medical/social work visits though some of those services were provided by nurses

during nursing visits or by other departments of Bay Medical Center.

117. Bay Medical Center Home Health does not currently provide care of

certain high tech devices such as the Denver pleuroperitoneal pump or the

subclavian pump. Its staff would have to be trained to provide such care.

118. Bay Medical Center Home Health has never given blood transfusions or

cared for a Denver shunt.

119. Bay Medical Center Home Health has a very low number of average

visits per patient (6.8) when compared to the state average of 30 visits per

patient.

120. Bay Medical Center Home Health does a low percentage of Medicaid

visits. In 1986, Bay Medical Center Home Health was reimbursed for 120 Medicaid

visits out of a total of 3,280 Medicaid-reimbursed visits provided in District

II.

121. A comparison of reimbursed Medicaid visits provided by Bay Medical

Center Home Health to District II as a whole demonstrates a Medicaid access

problem. In 1986, Bay County had 25 percent of the district's population and 16

1/2 percent of the district's Medicaid eligible. Yet only 3.7 percent of the

district's Medicaid-reimbursed home health visits were provided in Bay County.

If services were Medicaid accessible, the number of Medicaid visits would be

closer to the Medicaid percent of the population.

122. Bay Medical Center Home Health Care's Medicaid visits represented

only 1 percent of their total visits for 1986.

123. When Home Health of Panama City's zero (0) Medicaid visits is

considered, out of all home health visits provided in Bay County only 0.7

percent were Medicaid visits.

124. Approximately 25 percent of Dr. Ehrman's patients from the Panama

City area are Medicaid or indigent. This evidences a need for more Medicaid

services.

125. Bay Medical Center Home Health has no line item for marketing and

advertising.

Ability of the Applicant To Provide Quality of Care

126. Dr. Ehrman is a highly trained and experienced physician. While in

Canada, Dr. Ehrman established a hematology and oncology health care delivery

system in Montreal. This system is still in existence and working well.

127. Dr. Ehrman has been instrumental in improving the delivery of health

care in his practice area. He has established tumor boards at local hospitals

and provided many new procedures and devices in the home.

128. Dr. Ehrman has raised the level of awareness on the part of other

practitioners in his area as to a team approach to the delivery of services.

This has increased the type of home services now available.

129. Dr. Ehrman has responded to the needs of his patients for a multi-

disciplinary approach to oncology by associating a clinical psychologist. This

person deals with the psychological needs of the cancer patients seen by Dr.

Ehrman.

130. Dr. Ehrman has been instrumental in beginning many new and innovative

practices in his office. For instance, he administers chemotherapy to Medicare

patients in his office. He accomplished this by arranging with local

pharmacists to mix and supply chemotherapy drugs. Dr. Ehrman will work with

these same pharmacists in Home Health Care of Bay.

131. Dr. Ehrman is involved in a durable medical equipment company. Many

new devices and treatments were first used in the area by Dr. Ehrman's company.

Dr. Ehrman has been a leader in the community in keeping up with new home health

care developments.

132. Home Health Care of Bay will have adequate staff on a full-time basis

and add staff as utilization increases.

133. Dr. Ehrman currently contracts with two nurses who are well trained

and have over 1,000 hours of in-service training.

134. Home Health Care of Bay is committed to keeping up with state-of-the-

art home health care services and will add new services as they are developed.

Availability and Adequacy of Alternatives

135. There are no realistic alternatives to the establishment of a new

home health agency.

136. The alternative of nursing home care is not satisfactory. Most

persons would prefer home care to nursing home care when at all possible.

137. The alternative to home care which is currently being used is to

shuttle the patient from the emergency room to the hospital to the doctor's

office. Eventually the patient drops out of the system or settles for a lower

level of services.

Availability of Resources, Including Health Manpower,

Management Personnel and Funds for Capital and

Operating Expenditures . . . Extent to Which the

Proposed Services Will Be Accessible to All Residents

138. The staffing requirements for Home Health Care of Bay are shown on

Table 11 of the application. That staffing plan is reasonable.

139. Home Health Care of Bay will have a full-time administrator at a

salary of $27,000. A capable administrator can be recruited at that salary.

140. Home Health Care of Bay will employ a full-time nurse supervisor at a

salary of $21,000. A nurse supervisor can be hired at that salary.

141. Home Health Care of Bay will employ a full-time clerical person at an

annual salary of $16,000. A clerical person can be hired at that salary.

142. The above salaries and Home Health Care of Bay's ability to recruit

such persons is reasonable based on Dr. Ehrman's experience employing similar

personnel in his office.

143. Home Health Care of Bay will hire contract staff to provide skilled

nursing services, physical therapy services, speech therapy services,

occupational therapy services, medical/social work services, and home health

aide services.

144. Such persons can be contracted with to provide the type of services

Home Health Care of Bay proposes based on discussions with such persons.

145. Dr. Ehrman currently contracts with two nurses in Ft. Walton Beach to

provide nursing services similar to those proposed by Home Health Care of Bay.

Such services are provided mainly to non-Medicare patients and the arrangement

has worked very well.

Funds for Capital and Operating Expenditures

146. Project costs are depicted on Table 25 of the application. The costs

are reasonable.

147. Home Health Care of Bay can be started for $22,600.

Immediate and Long-Term Financial Feasibility of the Proposal

148. At hearing, DHRS admitted the short-term financial feasibility of

Home Health Care of Bay's proposal.

149. The statement of projected income and expense in Figure 7 of the

application and on page 14 of Dr. Kolb's report was prepared under Dr. Kolb's

supervision.

150. The majority of assumptions on which the pro forma is based have been

stipulated to by DHRS as reasonable assumptions on which to base a financial

projection. The only assumptions not admitted by DHRS relate to utilization and

payor mix. DHRS, however, introduced no evidence that refuted the

reasonableness of these assumptions.

151. The utilization projection used to calculate gross revenue in the pro

forma was 3,800 visits in 1988 and 8,500 visits in 1989. The utilization

projections are reasonable based on the agency's demographic base and Dr.

Ehrman's commitment to education and marketing.

152. The projection of costs and charges depicted on page 45 of the

application is reasonable based on Dr. Ehrman's current office experience.

153. The number of visits is multiplied by the charge per visit type to

calculate gross revenue. This calculation yields a gross revenue of

approximately $200,000 in year 1 and $462,000 in year 2.

154. The payor mix for Home Health Care of Bay is found on Table 7 of the

application. Home Health Care of Bay predicts 3 percent Medicaid visits, 80

percent Medicare visits, 14 percent private pay and insurance visits, and 3

percent indigent visits. The pay mix projections are reasonable based on the

mix of patients Dr. Ehrman currently sees. Ms. Farr admitted that the

projections were reasonable.

155. The difference between Medicare and Medicaid reimbursement and full

charges results in the contractual allowances figure. Bad debt and charity

deductions were calculated based on 3 percent indigent and 3 percent Medicaid

visits.

156. Deductions from gross revenue, which are funds not received because

of contractual allowances, bad debts, or charity, are subtracted to yield net

revenue. Deductions from revenue are approximately $38,000 in year 1 and

$135,000 in year 2.

157. Net revenue is approximately $162,000 in year 1 and $327,000 in year

2.

158. The second portion of the pro forma lists expenses. This list

contains all the expenses expected for a new home health agency. All the

expenses listed are reasonable.

159. The pro forma shows a loss of $28,505 in the first year and a profit

of $13,207 in the second year. Home Health Care of Bay has the equity to

sustain a loss in the first year.

160. In the second year of operation, based on the above assumptions,

expenses are $314,000 and net revenue is $327,000 for a net income of $13,000.

161. These projections indicate that the project is financially feasible

in the long term.

162. Table 26 on page 41 of the application presents the project timetable

anticipated when the application was filed. Any delay in this timetable due to

this litigation will not materially change the projections or commitments

contained in the application.

Impact of the Proposal on Costs of Providing

Health Services, Including Effects of Competition

and Improvements in Financing and Delivery of Health

Services Which Foster Competition and Services To

Promote Quality Assurance and Cost Effectiveness

163. The introduction of a new home health agency into the Bay County

market will stimulate competition. Such competition will stimulate growth in

competitors and increase the overall level of services.

164. Approval of a new competitor where there has been no new competition

for nine to ten years will put pressure on providers to provide a wider range of

services as well as higher quality services.

165. Ms. Young, administrator of Bay Medical Center Home Health, admitted

that if Home Health Care of Bay's CON is approved, her agency might begin

educating physicians in regard to available services, rather than waiting for

physicians to request a service.

166. As the current providers testified, as agency visits go up or down,

the number of staff required can be adjusted without incurring unreasonable

costs. Current providers have control over their costs and staffing.

167. Home Health Care of Bay's charges are competitive. In some areas,

such as skilled nursing and home health aide, Home Health Care of Bay's charges

are lower than current providers' charges. Price competition allows competition

for private pay patients.

Impact

168. The addition of Home Health Care of Bay to the home health market

will not significantly affect current providers. Studies have indicated that

new entrants into the home health market do not significantly affect existing

providers.

169. The elderly population of Bay County is growing rapidly. When the

1984 home health use rate is applied to elderly population growth between 1986

and 1989, approximately 5,800 new visits are attributable to population growth

alone.

170. Home Health Care of Bay projects it will deliver 3,800 visits in its

first year of operation and 8,500 visits in its second year. Thus, a large

percentage of those visits are attributable to population growth alone.

171. Home Health Care of Bay's marketing and education programs will raise

the local use rate and generate more visits.

172. Dr. Kolb analyzed the financial impact of Home Health Care of Bay's

project on current providers. Her analysis considers a worst case scenario and

assumes that current providers' visit levels will be affected by the

introduction of a new provider. The analysis then calculates the financial

impact on current provider.

173. In order to do this , Table 11 calculates the average cost per visit

from existing agencies' 1985 Medicare cost reports.

174. Home Health Care of Panama City's average cost per visit is $37.18.

Bay Medical Center Home Health's average cost per visit is $41.76.

175. The Medicare program pays agencies the lower of Medicare cost caps or

actual costs. The current providers in Bay County are well below the Medicare

cost caps and so will be paid their actual costs.

176. Table 11 calculates the difference between actual agency costs and

Medicare cost caps. Home Health of Panama City was 18 percent below its cost

caps. Bay Medical Center Home Health was 24 percent below its cost caps.

177. Thus, Home Health Care of Bay could provide the number of visits it

projects and even if all those visits came from existing providers, the current

providers could still operate at a level of cost that would be Medicare

reimbursable.

178. The approval of Home Health Care of Bay's application will not have a

significant adverse impact on existing providers.

CONCLUSIONS OF LAW

179. The Division of Administrative Hearings has jurisdiction of the

parties to and the subject matter of these proceedings. Section 120.57(1),

Florida Statutes.

180. Home Health of Bay, as the applicant, has the initial burden of

proving by competent, substantial evidence that it is entitled to a CON under

the applicable criteria. Florida Department of Transportation v. J.W.C. Co.,

Inc., 396 So.2d 778 (Fla. 1st DCA 1981). Once Home Health of Bay makes a prima

facie showing of entitlement, the burden of going forward shifts to DHRS.

181. The applicable statutory criteria are contained in Section

381.494(6)(c), Florida Statutes (1985). The parties stipulated and it was found

that the criteria in Section 381.494(6)(c) 5, 6, 7, 10, 11 and 13 are

uncontested or inapplicable. The criteria in Section 381.494(6)(c )1, 2, 3, 4,

8, 9, and 12 are the criteria still at issue in this proceeding. Those criteria

still at issue are:

1. The need for the health care facilities

and services and hospices being proposed in

relation to the applicable district plan and

state health plan . . . .

2. The availability, quality of care,

efficiency, appropriateness, accessibility,

extent of utilization, and adequacy of like

and existing health care services and hospices

in the service district of the applicant.

3. The ability of the applicant to provide

quality of care.

4. The availability and adequacy of other

health care facilities and services and

hospices in the service district . . . . which

may serve as alternatives . . . .

8. The availability of resources, including

health manpower, management personnel, and

funds for capital and operating expenditures,

for project accomplishment and operation;

the availability of alternative uses of such

resources for the provision of other health

services; and the extent to which the proposed

services will be accessible to all residents

of the service district.

9. The immediate and long-term financial

feasibility of the proposal.

12. The probable impact of the proposed

project on the costs of providing health

services proposed by the applicant, upon

consideration of factors including, but not

limited to, the effects of competition on the

supply of health services being proposed and

the improvements or innovations in the

financing and delivery of health services

which foster competition and service to

promote quality assurance and cost-

effectiveness.

182. Of these criteria still at issue only the determination of need and

the availability of existing services merit extensive discussion. All the other

criteria simply involve factual determinations which were made supra in the

Findings of Fact. Accordingly, it is concluded that criteria 3, 4, 8, 9, and 12

have been satisfied by Home Health of Bay and Home Health of Bay's entry into

the area will promote competition and improvement of home health services in Bay

County, Florida.

183. DHRS has no rule to determine need for home health agencies.

Instead, DHRS asserts that its incipient policy is to apply the statutory

criteria.

184. McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla.

1st DCA 1977), permits an agency to refine its incipient policy through the

adjudication of individual cases. However, when an agency attempts to utilize

policy not contained in adopted rules, the agency:

[M ] ay be required by any disappointed

applicant to defend its policy in a Section

120.57 proceeding where the Division will be

required to present evidence and argument and

to "expose and elucidate its reasons for

discretionary action." McDonald, supra, 346

So.2d at 584.

State, Department of Administration, Division of Personnel v. Harvey, 356 So.2d

323, 326 (Fla. 1st DCA 1978). Thus, where an agency attempts to rely on non-

rule policy, it must defend and explicate such policy in a Section 120.57

hearing.

185. The manner in which an agency must prove up incipient policy in the

CON context was articulated in Florida Medical Center v. Department of Health

and Rehabilitative Service, 463 So.2d 381 (Fla. 1st DCA 1985) There the court

noted that DHRS had failed to appropriately establish its non-rule policy. The

court stated at page 382:

To the extent an agency may intend in its

final order to rely upon or refer to policy

not recorded in rules for discoverable

precedents, that policy must be established by

expert testimony, documentary opinion, or

other evidence appropriate to the nature of

the issues involved and the agency must expose

and elucidate its reasons for its

discretionary action. Florida Cities Water

Co. v. Public Service Commission, 384 So.2d

1280 (Fla. 1980); Anheuser-Busch, Inc. v.

Department of Business Regulation 393 So.2d

1177 (Fla. 1st DCA 1981); McDonald v.

Department of Banking and Finance, 346 So.2d

569 (Fla. 1st DCA 1977).

E.M. Watkins & Co. v. Board of Regents, 414

So.2d 583, 588 (Fla. 1st DCA 1982). See also

Amos v. Department of Health and

Rehabilitative Services, 444 So.2d 43, 47

(Fla. 1st DCA 1984).

186. In this case, DHRS' incipient policy for review of home health agency

CONs was represented by the Office of Community Medical facilities to be a

review of Home Health Care of Bay's application in relation to the thirteen

statutory criteria.

187. The only standard by which the assessment of need was to be made was

whether the applicant affirmatively demonstrates that there is an unmet need,

that there is no home health service available, or there is an accessibility

problem where certain services are not being offered. This is the standard

articulated by Ms. Farr, DHRS' witness. Ms. Farr was not competent to expose

and elucidate DHRS' reasons for its incipient policy. She was simply the person

at DHRS who tried to carry out the incipient policy. Accordingly, it is

concluded that DHRS failed to carry its burden of establishing and supporting

the non-rule standard for determination of need which it applied in this case.

188. Further, at the same time that DHRS has been applying this nebulous

standard for need assessment in its Office of Community Medical Facilities, it

has been rejecting the same standard in Final Orders in other cases.

Specifically, in Nurse World, Inc. v. Department of Health and Rehabilitative

Services, 9 FALR 4258 (Final Order July 23, 1987), the Recommended Order stated

and the Final Order adopted the following at page 4273:

Since HRS had no need methodology or

policy in place at date of hearing, it took

the position that an applicant must

demonstrate need by finding people who are not

getting the service. Ms. Gordon- Girvin

Petitioner's expert who had been employed at

HRS in health planning for 11 years, opined

that there is no adequate quantifiable

technique available as a health planning

methodology that will allow a health planner

to make use of a negative demonstration of

need. She suggested use of responses to a

newspaper advertisement and then demolished

that method of proof as "impractical".

Another difficulty with this type of negative

demonstration approach is that existing

agencies can deal with increased need demands

by simply continuing to add staff. Gordon-

Girvin knew of no applicant that had acquired

a CON by proving lack of access.

Additionally, a similar agency position (the

Rule of 300) has been struck down by the

courts. This negative burden of proof concept

has been given short shrift by the courts and

is rejected here as well. See Department of

Health and Rehabilitative Services v. Johnson

and Johnson Home Health Care, Inc., 447 So.2d

361 (Fla. 1st DCA 1984).

189. Thus, in Nurse World, the Secretary of DHRS explicitly rejected the

policy which the Office of Community Medical Facilities attempted to prove in

this case. In this case, DHRS put on no witness in a policy-making position who

could attempt to explain this blatant inconsistency.

190. DHRS' position in this case can only be characterized as arbitrary

and capricious. Further, DHRS' preliminary decision had no reasonable basis in

law or fact at the time it was made. In the context of administrative

proceedings, arbitrary and capricious are defined as follows:

A capricious action is one which is taken

without thought or reason or irrationally. A

arbitrary decision is one not supported by

facts or logic, or despotic.

Agrico Chemical Co. v. Department of Environmental Regulation, 365 So.2d 759,

763 (Fla. 1st DCA 1979). DHRS' review of Home Health Care of Bay's application,

with its attendant negative standard for determining need, falls squarely within

the Agrico definition. The policy DHRS utilized to assess the need for Home

Health Care of Bay's proposal is rejected as unreasonable, arbitrary and

capricious, and inconsistent with current DHRS policy as embodied in Nurse

World. Therefore, a reasonable methodology to assess need must be determined.

191. When no state-wide rule, policy or approach is in effect, a

methodology proven by expert testimony to be reasonable may be utilized. Nurse

World, 9 FALR at 4276. The use rate population based need methodology presented

by Home Health Care of Bay to determine need is reasonable.

192. This methodology was proven to be a reasonable methodology by an

independent health planning expert. It uses commonly applied health planning

principles and data. The same methodology was utilized, and viewed as

reasonable by DHRS in the batching cycle just prior to Home Health Care of Bay's

application. See also Englewood Home Health Care, Inc. v. Department of Health

and Rehabilitative Services, 9 FALR 4221, 4240 (Final Order July 23, 1987).

193. Section 381.494(6)(c )1 directs that need for a project be reviewed in

relation to the applicable state and local health plans. Home Health Care of

Bay's project will promote the goals of the state health plan by maximizing

competition while insuring reasonable economies of scale. The project will also

be cost effective and offer an alternative to institutional long term care.

194. DHRS has recognized that:

All of the available date indicates that

there is a range of "economies of scale" in

costs per visit for new start-up home health

agencies, breaking somewhere between 6,000

and 9,000 or 10,000 visits. Once this

breaking point is reached, the relatively

small level of fixed costs in home health

level off, and the data do not show any

further significant points of economies of

scale.

Englewood Home Health, 9 FALR at 4236. Home Health Care of Bay utilizes 9,000

visits as part of the basis of its needs assessment.

195. Home Health Care of Bay's project is consistent with the local health

plan because it will increase access of economically underserved groups to home

health services. The proposal will also raise public awareness about the use of

home health services.

196. The availability, adequacy and appropriateness of existing home

health services in inadequate. The two existing providers do not offer many of

the high tech nursing services proposed by Home Health Care of Bay. Current

providers concentrate on nursing and aide services, while failing to provide

other services, such as medical/social work.

197. Additionally, access of economically underserved patients is

restricted in Bay County. One provider does no Medicaid visits and the other

provider does only a very small percentage.

198. The provision of services to Medicaid and indigent patients is an

important consideration in CON review. St. John's Home Health Agency v.

Department of Health and Rehabilitative Services, 509 So.2d 367 (Fla. 1st DCA

1987); Englewood Home Health Care, Inc. v. Department of Health and

Rehabilitative Services, 9 FALR at 4223; Visiting Nurse Association v.

Department of Health and Rehabilitative Services, 9 FALR 4203, 4212-13 (Final

Order July 23, 1987).

199. Here, Home Health of Bay's Commitment to provide 6 percent of its

patient visits to the traditionally underserved will serve to increase

availability and accessibility both through provision of those services by Home

Health of Bay and through increased competition by existing providers.

200. The statistical evidence also supports a conclusion that existing

services are not accessible. Even though Home Health of Bay did not

specifically identify a person or persons who sought services which were

unavailable, the statistical data regarding existing services and utilization

compared with demographics clearly indicates that there is a need for the

services which Home Health of Bay proposes.

201. Based on "a balanced consideration of all the statutory criteria,"

Balsam v. Department of Health and Rehabilitative Services, 486 So.2d 1341, 1349

(Fla. 1st DCA 1986), it is concluded that there is a need for another Medicare-

certified home health agency to serve Bay County. Home Health of Bay has

established its entitlement to be that agency.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Department of Health and Rehabilitative Services enter

a Final Order granting CON No. 4912 to Home Health Care of Bay County, Florida,

Inc., to establish a Medicare-certified home health agency in Bay County,

Florida.

DONE AND ENTERED this 17th day of December, 1987, in Tallahassee, Florida.

___________________________________

DIANE K. KIESLING

Hearing Officer

Division of Administrative Hearings

The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904 )488-9675

Filed with the Clerk of the

Division of Administrative Hearings

this 17th day of December, 1987.

APPENDIX TO THE RECOMMENDED ORDER

IN CASE NO. 87-2151

The following constitutes my specific rulings pursuant to Section

120.59(2), Florida Statutes, on the proposed findings of fact submitted by the

parties in this case.

Specific Rulings on Proposed Findings of Fact

Submitted by Petitioner, Home Health Care of Bay County,

Florida, Inc.

1. Each of the following proposed findings of fact are adopted in

substance as modified in the Recommended Order. The number in parentheses is

the Finding of Fact which so adopts the proposed finding of fact : 1-3(1-3);

5(4); 7-10(5-8); 12-16(48- 52); 18(53); 19 & 20 (54); 21(55); 24-27(56-59); 28-

31(59-62); 37-52(9-24); 54-57(25-28); 58-77(28-47); 78-89(63-74); 91-102 (75-

86); 104-114(87-97); 116-129(97-110); 130(110); 131(111); 133-135(112); 136-

139(113); 140 & 141(114); 142-153(115-126); 154-163(126-135); 165-175(136-146);

179-182(147-150); 183(150); 184 & 185(151); 186(152); 187 & 188(153); 189-

191(154); 192 & 193(155); 194 & 195(156); 196(157); 197(158); 200-203(159-162);

207(163); 209(164); 210(165); 212-218(166-172); and 219-225(172-178).

2. Proposed findings of fact 17, 32-36, 53, 90, 103, 115, 132, 164, 176-

178, 198, 199, 204-206 and 211 are subordinate to the facts actually found in

this Recommended Order.

3. Proposed findings of fact 22, 23 and 208 are rejected as being

unsupported by the competent, substantial evidence.

4. Proposed findings of fact 4 and 11 are rejected as being unnecessary

and/or irrelevant.

Specific Rulings on Proposed Findings of Fact

Submitted by Respondent, Department of Health and

Rehabilitative Services

1. Each of the following proposed findings of fact are adopted in

substance as modified in the Recommended Order. The number in parentheses is

the Finding of Fact which so adopts the proposed finding of fact : 1(1 & 2);

2(3); 6(Footnote 1); 7(148) and 13(4).

2. Proposed findings of fact 3-5, 8-12, 14-40, 43-45 and 47-53 are

subordinate to the facts actually found in this Recommended Order.

3. Proposed finding of fact 42 is rejected as being unsupported by the

competent, substantial evidence.

4. Proposed findings of fact 4 and 46 are rejected as being unnecessary

and/or irrelevant.

COPIES FURNISHED:

Byron B. Mathews, Jr., Esquire

Vicki Gordon Kaufman, Esquire

McDermott, Will and Emory

101 N. Monroe Street

Tallahassee, Florida 32301

Theodore E. Mack, Esquire

Assistant General Counsel

Department of Health and

Rehabilitative Services

Regulation & Health Facilities

Ft. Knox Executive Center

2727 Mahan Drive

Tallahassee, Florida 32308

Gregory L. Coler, Secretary

Department of Health and

Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Sam Power, Clerk

Department of Health

and Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

HOME HEALTH CARE OF BAY

COUNTY, FLORIDA, INC.,

Petitioner,

CASE NO. : 87-2151

vs. CON NO.: 4912

DEPARTMENT OF HEALTH AND

REHABILITATIVE SERVICES,

Respondent.

____________________________/

FINAL ORDER

This cause came on before me for the purpose of issuing a final agency

order. The Hearing Officer assigned by the Division of Administrative Hearings

(DOAH) in the above- styled case submitted a Recommended Order to the Department

of Health and Rehabilitative Services (HRS). A copy of that Recommended Order

is attached hereto.

RULING ON EXCEPTIONS FILED BY HRS

1. HRS excepts to the Hearing Officer's conclusion of law that the

department's reliance on the statutory criteria to evaluate need is "nebulous"

and the further conclusion that the failure to establish a need methodology is

arbitrary and capricious. This exception is granted as the department is not

required by law to promulgate a need methodology.

2. HRS excepts to the Hearing Officer's reference to a requirement that an

applicant prove an "unmet need". This exception is granted as a decision on an

application for a CON to provide home health services must be made on the basis

of a balanced weighing of all applicable statutory criteria.

3. HRS excepts to the Hearing Officer's reliance on Final Orders entered

in other cases. This exception is denied.

4. HRS excepts to the Hearing Officer's reliance on a need methodology

abandoned by the department. The exception is granted to the extent that the

Hearing Officer would reinstate the abandoned methodology and establish it again

as non rule policy of the department. The exception is denied to the extent

that the methodology is merely evidence presented by the applicant relevant to

the statutory criteria of need. An applicant is entitled to present evidence to

show that the application satisfies the statutory criteria. This exception is

granted in part and denied in part. The Hearing Officer's findings and analysis

regarding the abandoned methodology are found on pages 11, 12, and 36 of the

Recommended Order.

FINDINGS OF FACT

The Department hereby adopts and incorporates by reference the findings of

fact set forth in the Recommended Order.

CONCLUSIONS OF LAW

The Department hereby adopts and incorporates by reference the conclusions

of law set forth in the Recommended Order except where inconsistent with the

rulings on the exceptions.

Based upon a balanced weighing of all applicable statutory criteria, it is

ADJUDGED, that the application for CON 4912 by Home Health Care of Bay

County, Florida, Inc. be approved. The CON is subject to the requirement that

service to Medicaid patients and other indigent patients shall be provided as

follows : Medicaid 3 percent of total visits, other indigents - 3 percent of

total visits.

DONE and ORDERED this 15th day of February, 1988, in Tallahassee, Florida.

Gregory L. Coler

Secretary

Department of Health and

Rehabilitative Services

by________________________________

Assistant Secretary for Programs

COPIES FURNISHED:

Diane K. Kiesling

Hearing Officer

Division of Administrative Hearings

The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

Bryon B. Mathews, Jr., Esquire

Vicki Gordan Kaufman, Esquire

McDERMOTT, WILL & EMERY

Monroe-Park Tower, Suite 1090

101 North Monroe Street

Tallahassee, Florida 32301

Theodore E. Mack, Esquire

Assistant General Counsel

Department of Health and

Rehabilitative Services

2727 Mahan Drive

Tallahassee, Florida 32399

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a copy of the foregoing was sent to the above-named

people by U.S. Mail this 17th day of February, 1988.

_________________________________

R. S. Power, Agency Clerk

Assistant General Counsel

Department of Health and

Rehabilitative Services

1323 Winewood Boulevard

Building One, Room 407

Tallahassee, Florida 32399-0700

904/488-2381

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL

REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH

THE AGENCY CLERK OF HRS, AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED

BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE

AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS

SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE

OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.