92-005099CON Healthsouth Rehabilitation Of Fort Lauderdale, Inc., D/B/A Healthsouth Sunrise Rehabilitation vs. Agency For Health Care Administration Status: Closed Recommended Order on Friday, May 28, 1993.

Summary: Certificate of Need for comprehensive medical rehabilitation beds granted due to special circumstances although fixed need rule calculation showed no numeric need.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HEALTHSOUTH REHABILITATION OF )

FLORIDA, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 92-5099

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent, )

and )

)

BAYFRONT MEDICAL CENTER, INC., )

)

Intervenor. )

___________________________________)

RECOMMENDED ORDER

Pursuant to Notice, this cause was heard by Linda M. Rigot, the assigned

Hearing Officer of the Division of Administrative Hearings, on December 7-9,

1992, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Thomas F. Panza, Esquire

Susan Horovitz Maurer, Esquire

Panza, Maurer, Maynard,

Platow & Neel, P.A.

3081 East Commercial Boulevard

Fort Lauderdale, Florida 33308

For Respondent: Edward Labrador, Esquire

Agency for Health Care Administration

Fort Knox Executive Center

2727 Mahan Drive

Tallahassee, Florida 32308

For Intervenor: Stephen A. Ecenia, Esquire

Rutledge, Ecenia, Underwood &

Purnell, P.A.

Barnett Bank Building, Suite 500

Post Office Box 551

Tallahassee, Florida 32302-0551

STATEMENT OF THE ISSUE

The issue presented is whether Petitioner's application for Certificate of

Need No. 6932 for the addition of 20 comprehensive medical rehabilitation beds

in District V should be approved.

PRELIMINARY STATEMENT

On March 23, 1992, Petitioner filed its application for Certificate of Need

No. 6932 to add 20 comprehensive medical rehabilitation beds to its existing 40-

bed free-standing specialty rehabilitation hospital located in Largo, Florida,

which is part of health planning District V. No other applications for the

provision of such services within District V were filed during this batching

cycle. On July 6, 1992, Respondent issued its State Agency Action Report

setting forth its intent to deny that application, and Petitioner timely filed

its Petition for Formal Administrative Proceedings. This cause was thereafter

transferred to the Division of Administrative Hearings for the conduct of that

formal hearing.

By Notice of Hearing entered September 22, 1992, this cause was scheduled

for formal hearing commencing December 7, 1992. By Order entered December 2,

1992, the Petition to Intervene filed by Bayfront Medical Center, Inc., was

granted.

Petitioner Healthsouth Rehabilitation of Florida, Inc., presented the

testimony of Jennifer Jones Bullock; Vincent Nico; Richard Liles, M.D.; David H.

Baras, M.D.; Ricky P. Lockett, M.D.; Jack R. Mills; Bruce Payton; James P.

Bennett; and Margo Kelly. Additionally, Petitioner's Exhibits numbered 1-6, 7-

A, 7-D through 7-Z, and 9-18 were admitted in evidence.

Respondent Agency for Health Care Administration presented the testimony of

Alberta Granger. Additionally, the Agency's Exhibits 1-4 were admitted in

evidence.

Intervenor Bayfront Medical Center, Inc., presented the testimony of Karen

L. Williams, M.D.; Stephanie Doughty, and Susan B. Lewellen. Additionally,

Bayfront's Exhibits numbered 1-12 were admitted in evidence.

On March 12, 1993, Petitioner filed its Proposed Recommended Order and the

Respondent Agency and the Intervenor filed their Joint Proposed Recommended

Order. A specific ruling on each proposed finding of fact can be found in the

Appendix to this Recommended Order.

FINDINGS OF FACT

1. Petitioner Healthsouth Rehabilitation of Florida, Inc., d/b/a

Healthsouth Rehabilitation Hospital (hereinafter "Healthsouth") is a 40-bed

free-standing inpatient specialty hospital which began operations in January of

1989 in the City of Largo, Pinellas County, Florida, to serve the comprehensive

medical rehabilitation (hereinafter "CMR") needs of the population within

District V, a health planning district established by Respondent Agency for

Health Care Administration (hereinafter "Agency"). Healthsouth also serves an

outpatient population by providing approximately 1100 outpatient visits per

month. It has physicians representing 40 different medical specialties on staff

as well as six physiatrists.

2. Healthsouth's occupancy at the time of the final hearing was 97

percent. Further, Healthsouth consistently maintains a waiting list of between

15 and 20 persons awaiting admission into the Healthsouth facility.

3. Intervenor Bayfront Medical Center, Inc., (hereinafter "Bayfront") is a

518-bed acute care hospital located in the City of St. Petersburg, the southern-

most tip of Pinellas County. Bayfront has held a license for a 60-bed CMR unit

since at least 1985. Bayfront is also a Level II trauma center with a 5-county

catchment area, thereby receiving patients from outside District V. Bayfront

provides inpatient and outpatient CMR services.

4. At the time of hearing, Bayfront's utilization was 100 percent of the

22 beds it actually operates. Further, Bayfront maintains a waiting list for

admissions.

5. Sun Coast Hospital (hereinafter "Sun Coast") is an osteopathic acute

care hospital with a license for 20 CMR beds. It has the only osteopathic CMR

unit in District V.

6. At the time of hearing, Sun Coast's utilization was at 75 percent for

its CMR unit. It was, however, at 100 percent utilization for the 15 beds it

actually operates. Further, Sun Coast maintains a waiting list for admissions.

7. Pasco County is also part of health planning District V. Pasco County

has a single provider of CMR care, Riverside Hospital (hereinafter "Riverside").

The occupancy of Riverside's 20 CMR beds exceeded 85 percent at the time of the

final hearing.

8. The project for which Healthsouth seeks a certificate of need

(hereinafter "CON") in this proceeding involves construction to accommodate the

addition of 20 beds and the renovation of the outpatient treatment and dining

areas of the facility. The current configuration of the facility includes a 10-

bed brain injury program and a 10-bed spinal cord injury program. If this CON

application is approved, eight beds would be a dedicated pediatric program. The

remaining 12 beds would allow for full utilization of the dedicated brain injury

and spinal cord injury beds currently in service but often used by non-

specialty, i.e. orthopedic or stroke, patients due to high utilization of the

facility.

9. CMR is the administration of appropriate medical care and intensive

therapy, with the goal of correcting patients' functional limitations and

returning them to as near a functional level as they maintained prior to injury.

Candidates for CMR services must meet required medical admissions criteria.

10. The interdisciplinary team approach is the standard model for CMR

care. The interdisciplinary team includes and is directed by a physician who is

a rehabilitation specialist. Usually this is a physiatrist, but it can also be

a neurosurgeon, neurologist, orthopedic surgeon or rheumatologist. The

remainder of the team, where appropriate, includes physical, occupational,

speech, recreational, and respiratory therapists; psychologists;

neuropsychologists; vocational counselors; dietitians; case managers or social

workers; the patient; and the patient's family or caregivers.

11. The family is an integral part of the interdisciplinary team approach.

Most patients in need of CMR are over the age of 65. The family or caregivers

must be involved in the patient's rehabilitation to help achieve the ultimate

goal of getting the patient back to independent living settings. Reaching that

goal requires the education of the family or caregivers to assist the patient in

performing everyday activities, such as getting in and out of the bathroom and

transferring from a wheelchair to a car. Family members or caregivers must come

to the rehabilitation facility for training and to be educated to deal with the

fact that the patient may never resume normal activities.

12. The requirements of effective CMR make other providers in District V

inaccessible, unavailable, and inadequate to serve the patients within

Healthsouth's service area due to physician referral patterns and co-morbid

conditions, travel barriers for the elderly, full capacity at all existing

providers, Sun Coast's osteopathic nature, Healthsouth's unique specialty

accreditations, and the need for pediatric CMR services.

13. More than two-thirds of CMR patients are geriatric, i.e. over the age

of 65. District V has the greatest percentage of geriatric residents in the

State of Florida. Geriatric patients use CMR services more than any other age

group. Most CMR patients, because of their age, are admitted with more than one

primary physical ailment, called co-morbid conditions, requiring care by the

patient's primary physician or specialists.

14. When a patient is transferred to a distant location for CMR care, his

or her primary or specialty physician is not able to follow the patient during

rehabilitation. Although a new physician can be identified to review charts,

render medical care, or even consult with the patient's own doctors, that new

physician may act without knowledge of particular idiosyncratic reactions of the

patient to various treatments, thereby increasing the possibility of worse

medical outcomes, increasing psychological trauma to the patient and the

patient's family from the change in physicians, and creating additional expense

for tests which may have already been performed.

15. Healthsouth's and Bayfront's distinct patient origin patterns are not

accidental. Continuity of a primary physician's care is fundamental to

successful rehabilitation. To facilitate continuity of care, District V has

developed distinct north and south medical communities and distinct physician

referral patterns.

16. Healthsouth serves needs of patients referred by primary care

physicians and acute care providers in its primary service area of north and

central Pinellas County where the population is growing at the fastest rate.

Healthsouth also receives referrals from providers in south Pinellas County

because the patient lives in close proximity to Healthsouth or because

Healthsouth offers specialty services not available elsewhere in District V. On

the other hand, 91 percent of Bayfront's patients reside near Bayfront and are

referred by physicians practicing near Bayfront in the southern portion of

Pinellas County. Sun Coast primarily serves patients from north and central

Pinellas County who are seeking osteopathic CMR care. Riverside, the only CMR

provider in Pasco County, primarily serves residents of that county.

17. Healthsouth has demonstrated that all existing providers are

operationally full. Even if Bayfront could make available its non-operational

CMR beds, they would be inaccessible to the patients Healthsouth proposes to

serve due to the age and infirmities of CMR patients and caregivers and the

distance between the two facilities.

18. The role of family members and caregivers in successful rehabilitation

is vital. As the majority of CMR patients are geriatric, so are their

caregivers. Excessive driving by caregivers, especially geriatric caregivers,

is psychologically and physically draining and causes fatigue. The skill

required to negotiate the roads, as well as the distance and travel time

required for northern Pinellas County residents to reach Bayfront, create a

barrier to accessing CMR in southern Pinellas County and make Bayfront an

unreasonable alternative to the Healthsouth proposal to meet the needs of

northern Pinellas County residents.

19. The drive between Healthsouth and Bayfront takes 45 minutes and

involves heavy traffic since Pinellas is a densely populated county. It is

medically inappropriate and detrimental to the overall CMR process to require

geriatric patients and their geriatric caregivers to travel to a CMR provider

located 45 minutes away or further.

20. The family training may occur as often as every day or as little as

twice a week and includes psychological as well as physical training. Placing

northern Pinellas County residents in Bayfront may preclude their caregivers

from participating in their rehabilitation.

21. Moreover, physicians are unable to follow their patients through CMR

care when they are placed in a facility as remote as Bayfront. Physicians

cannot spend 1 1/2 to 2 hours traveling instead of devoting their working hours

to patient care. These are issues of quality of care and demands of running a

medical practice, not an issue of physician convenience.

22. Since opening its doors in 1989, Healthsouth has experienced a steady

increase in its occupancy, reaching 97 percent utilization, well above optimal

capacity, at the time of final hearing. By that same time, Riverside's

occupancy exceeded 85 percent utilization. The lower reported utilization rates

at Sun Coast and at Bayfront are misleading.

23. Sun Coast opened its 20-bed acute rehabilitation unit in August of

1991 and for the first year purposefully limited its census to 4-5 patients

because of reimbursement restrictions. In August of 1992 Sun Coast expanded its

CMR service to its desired cap of 12 patients for Sun Coast's second year of

operation. At the time of hearing, Sun Coast had already exceeded its new cap

of 12 patients and was at an average daily census of 15. Although a census of

15 represents an occupancy rate of only 75 percent of Sun Coast's licensed beds,

it represents 100 percent occupancy of the number of beds Sun Coast is actually

operating. Such a rapid increase in Sun Coast's census is indicative of an

unmet demand for CMR services, particularly in the northern portion of Pinellas

County from which Sun Coast draws its patients.

24. Bayfront's reported utilization of approximately 30 percent is

similarly misleading. Bayfront's actual utilization is 100 percent of the beds

that it operates, and Bayfront continually maintains a waiting list.

25. Bayfront was licensed for 60 CMR beds in July of 1985. At first,

Bayfront operated only 10 CMR beds. In 1987, Bayfront operated 20-22 CMR beds

and increased that number to 25 in 1988. During the first half of 1991,

Bayfront operated 32 CMR beds, the highest number Bayfront has ever operated.

In August of 1991 the number of operating CMR beds was decreased to 22 and had

not increased above that number through the time of the final hearing.

26. Bayfront explains that its failure to utilize all of its licensed CMR

beds results from massive renovations of its physical plant and its inability to

hire a second physiatrist since April of 1991. What Bayfront terms as its

massive renovation was completed in the spring of 1988. A subsequent renovation

involving its CMR unit was completed in November of 1990. Even after the

renovations, Bayfront does not have space for more than 48 CMR beds and cannot

accommodate the additional 12 CMR beds without additional

construction/renovation. Those 12 CMR beds have been utilized as part of the

neurological unit, then as part of the cancer center, and are currently part of

Bayfront's day surgery complement.

27. Bayfront's efforts to secure the services of an additional physiatrist

in order to operate more than 22 CMR beds are not impressive. The number of

physiatrists practicing in Pinellas County has increased dramatically over the

last several years, and it appears that no other CMR provider in the area has

had difficulty obtaining the services of physiatrists. Further, there is no

requirement of any regulatory body that only a physiatrist can operate a CMR

unit. Rather, the industry standard permits other specialists to be in charge

of CMR services related to that specialty; for example, orthopedic

rehabilitation services can be provided under the direction of an orthopedic

surgeon or a rheumatologist, and neurosurgeons or neurologists can direct the

provision of rehabilitation services related to neurological conditions.

Accordingly, Bayfront's inability to operate more than 22 CMR beds due to its

having only one physiatrist is a self-imposed condition.

28. Bayfront presented evidence regarding its plan to add a second

physiatrist in March of 1993 and a third physiatrist in August of 1993. Whether

a second physiatrist began providing services at Bayfront in March is unknown.

However, Bayfront also intended that same physiatrist to assume duties related

to its trauma center in addition to its CMR unit. Further, even if Bayfront

were to achieve its stated goal of having three physiatrists associated with its

CMR unit, the industry standard for physiatrists serving both inpatients and

outpatients is 15 beds each. Accordingly, Bayfront would still not be in a

position to operate all of its licensed CMR beds, and it is specifically found

that Bayfront has no intention to do so within the near future.

29. In addition to limiting the number of its available CMR beds to 21-22

patients, Bayfront's sole physiatrist has imposed a cap of no more than two

admissions to the CMR unit per day in order that she can maintain good quality

of care for the patients in that unit. The limitations cause patients on the

waiting list to wait an average of five to six days before they are able to

access a bed in Bayfront's CMR unit.

30. For Bayfront to increase the number of CMR beds it operates, it will

be required to recruit additional staff. Further, even if Bayfront can increase

the number of its CMR beds in accordance with its stated plan, Bayfront cannot

go beyond 48 CMR beds because the 12 beds currently being used for day surgery

patients are not wheelchair accessible and cannot be used for CMR patients. The

need to recruit additional staff in order to operate more than 22 beds,

Bayfront's decision to operate beds only under the supervision of physiatrists,

the fact that 12 of Bayfront's 60 CMR beds do not exist, and the absence of any

plan by Bayfront to construct CMR space for those 12 beds prove that Bayfront's

assertion that it can put all of its CMR beds in service within 24 hours is not

credible.

31. Bayfront's low historic utilization is not indicative of lack of

demand. Rather, demand is reflected by constant waiting lists, physician

complaints of inability to access beds at Bayfront's CMR unit, and high

utilization at other providers in the district. Bayfront's representation that

it will now open at least some of the remaining CMR beds appears to relate to

Bayfront's fear that it will lose its licensure for those beds more than a

genuine desire to meet the CMR needs of District V residents.

32. Even if Bayfront could operate all of its licensed beds, that would

not provide relief to the overcrowding at Healthsouth and the demand for CMR

services in northern Pinellas County because Bayfront does not serve that

community. Bayfront's CMR unit is primarily occupied by patients referred from

Bayfront's immediate service area and internal transfers from its Level II

trauma center. Therefore, any increase in availability of its CMR beds would be

usurped by its pent-up internal demand, its waiting list, and referrals from

other hospitals without CMR units, such as St. Anthony's, Edward White, and

Humana Sun Bay, all in southern Pinellas County within eight minutes' driving

time of Bayfront.

33. Likewise, Sun Coast is unable to serve as an alternative to

Healthsouth's proposal because it primarily serves osteopathic patients and is

already experiencing high occupancy. Approximately 50-75 percent of Sun Coast's

rehabilitation patients come from internal transfers. That percentage, based on

historic referral patterns, is expected to remain constant.

34. The high utilization over such a short existence is due to Sun Coast's

distinction as the only provider of osteopathic CMR care in District V. Most

physicians on Sun Coast's staff are osteopathic. Other osteopathic facilities

in District V which refer to Sun Coast include Metropolitan General Hospital and

University General Hospital.

35. The Commission on Accreditation of Rehabilitation Facilities

(hereinafter "CARF") is the national accrediting body which surveys specialty

rehabilitation hospitals and rehabilitation units to validate quality of care.

CARF offers general and specialty CMR accreditations upon inspection and

demonstration of excellence in quality of care. CARF accredited specialty

programs offer higher assurance of quality of care, shorter lengths of stay,

lower costs, and longer positive outcomes.

36. Healthsouth, accredited since 1989 by the Joint Commission on

Accreditation of Healthcare Organizations (hereinafter "JCAHO"), earned its CARF

accreditation for general inpatient rehabilitation in 1990. It is the exclusive

provider in District V of five CARF specialty accredited programs: acute brain

injury, day treatment brain injury, spinal cord injury, industrial work

hardening, and outpatient CMR care.

37. Though open since 1983 Bayfront did not receive its accreditation for

general inpatient rehabilitation from CARF until June of 1991. Bayfront has not

applied for accreditation in any areas of specialized rehabilitation.

38. Sun Coast holds no CARF accreditations. Space limitations do not

allow for the provision of specialty services such as brain, spinal cord, or

pediatric CMR, and Sun Coast does not anticipate seeking CARF specialty

accreditations for these services.

39. In addition to expanding access to its CARF specialty CMR programs

limited by high utilization, Healthsouth proposes to offer and seek CARF

specialty accreditation for an 8-bed dedicated pediatric unit. There is no

provider of pediatric CMR services in District V, and young children requiring

CMR care must leave District V to obtain it.

39. Children and adults should not be mixed in a rehabilitation program.

To develop a pediatric program, it is important that a physiatrist or someone

with equivalent rehabilitation training be on the staff. Healthsouth's staff

meets this requirement. In addition, special treatment protocols, areas for

treatment, and specially-sized equipment are necessary.

40. With a pediatric patient, often the only way to communicate and

perform the therapies on a child is through the family. The child will be

frightened by a therapist, physician, or nurse, and having a parent or a

significant other present makes it possible to perform the necessary therapies

to help the child. Accordingly, a pediatric program in geographic proximity

makes it possible for the child's caregivers to assist in the child's therapies.

41. Quantifying the need for pediatric CMR services in District V is

difficult because those organizations which collect and evaluate data regarding

the need for medical services do not collect data regarding pediatric CMR

patients. Specifically, the local health council in District V does not collect

such data, and the Health Care Cost Containment Board data on pediatric CMR out-

migration does not include figures reflecting pediatric CMR patients receiving

treatment in free-standing hospitals outside District V. Yet, almost one-half

of all CMR beds are located in free-standing facilities like Healthsouth.

42. District V has a pediatric patient population of 190,000. The CMR

providers in District V have received inquiries of behalf of pediatric patients

seeking admission, and medical doctors in District V have treated pediatric

patients and then referred them to facilities outside District V which offer

pediatric CMR services. The projection performed by Healthsouth's health care

planner demonstrated that it is reasonable to project a need for 8 pediatric CMR

beds in District V based upon the pediatric population and her experience as a

health planner in evaluating the need for pediatric CMR programs.

43. Skilled nursing facilities, home health services, and outpatient care

are not adequate alternatives for patients diagnosed as medically appropriate

for inpatient CMR. No interdisciplinary approach or team effort is available in

a skilled nursing facility or through home health care. Physiatrists available

in inpatient CMR programs are likewise unavailable in skilled nursing

facilities.

44. Fewer clinical therapies, usually only physical and occupational

therapy, are offered in skilled nursing facilities. Intensive inpatient CMR

therapy of five to six hours per day is reduced to a maximum of one to two hours

per day at a skilled nursing facility. Such less intense therapy results in

longer lengths of stay and may lead to psychological as well as physical

problems, including increased immobility, increased bed sores, increased

contractures, more bowel and bladder problems and an increased risk of

pneumonia. Additionally, many patients become depressed and lack motivation to

ever be properly rehabilitated.

45. Healthsouth contributes to filling the need for educational and

training facilities at the student internship training level. Healthsouth makes

clinical internships available to more than 20 educational institutions in all

clinical therapies and will be able to offer more student positions with the

expansion of its facility. Currently, it cannot accommodate all of the requests

for educational training it receives. In the field of speech therapy alone,

recent licensure requirements have doubled the need for clinical training sites

for such therapists.

46. Healthsouth offers a program for registered nurses seeking

certification as Certified Rehabilitation Registered Nurses (hereinafter

"CRRN"). These courses are open to all registered nurses because no other

District V provider offers similar training.

47. Healthsouth also offers extensive community re-entry programs which

assist in patient rehabilitation and educate the public about disabilities.

These programs are beneficial to patients, the medical community, and the

general public.

48. Healthsouth is geographically and financially accessible to all

residents within its patient base of north and central Pinellas County; however,

accessibility is limited due to the special circumstances present in District V

as set forth above, including continual waiting lists and difficulty traveling

experienced by geriatric patients. Healthsouth needs approval of its CON

application to meet the demand for CMR created by the residents of its primary

service area, northern Pinellas County, the fastest growing portion of Pinellas

County.

49. Contrary to testimony about Bayfront, Healthsouth is financially

accessible to all residents of District V. Healthsouth has never refused a

patient admission based on inability to pay. Healthsouth has exceeded its

combined Medicaid and charity care commitment of 3 percent by providing

approximately 4 percent of its total services to those patients, based on

revenue for the past four years. During 1992, through September, Healthsouth

increased its provision of these services so as to exceed 7 percent.

Healthsouth's commitment to Medicaid and indigent care can be expected to

continue. While Healthsouth's provision of Medicaid and charity care may not

appear to be substantial, there is no suggestion that additional Medicaid or

charity care patients sought admission to Healthsouth but were denied.

50. Financial feasibility was disputed only as to the reasonableness of

projected utilization for the expanded facility. Healthsouth's projected

utilization is reasonable, and its proposal is, therefore, financially feasible,

both short term and long term.

51. Healthsouth can be expected to capture the patients on its waiting

list. Although the list is 15-20 names in length, it reflects a larger number

of patients since names on the list are replaced by others in need of CMR care.

Those removed are often inappropriately placed in skilled nursing facilities.

No other provider can capture those patients due to established physician

referral patterns and due to the geriatric patient's inability and medical

inappropriateness to travel significant distances. Thus, only northern Pinellas

County providers can satisfy this local waiting list need, and Sun Coast cannot

serve as an alternative because it is already full, maintains its own waiting

list, and may be attractive primarily to osteopathic patients.

52. Healthsouth can satisfy a demand for specialty CMR services which only

it can provide in District V, including CARF-accredited brain and spinal cord

injury, work hardening, outpatient, and day treatment brain injury programs.

Healthsouth can also expect to capture the unmet need for pediatric CMR in

District V.

53. Further, the significant number of patients out-migrating to other

districts for CMR demonstrates the reasonableness of Healthsouth's projected

utilization. In 1991, 152 patients (not including pediatric) out-migrated to

general hospitals alone. No organization collects data regarding the number of

patients who out-migrated to specialty free-standing rehabilitation hospitals.

54. Bayfront's stated intention to open more beds, if realized, will not

adversely impact Healthsouth's projected utilization because it serves a

different geographic market; 91 percent of its patients come from south Pinellas

County. Further, Bayfront focuses on stroke and trauma injury cases and

maintains a waiting listauma physicians are experiencing difficulty having

their Bayfront patients admitted to Bayfront's CMR unit which is always full,

and Bayfront's additional physiatrist expected to report in March, if he does

so, specializes in trauma CMR.

55. There is adequate need for CMR in District V to fill 20 additional

beds at Healthsouth even if Bayfront increased its CMR unit up to the 48 beds

which it is physically capable of operating. The demand for CMR services in

District V is sufficient to accommodate the addition of CMR beds at Healthsouth

without affecting the utilization rates or costs of providing services at the

other CMR providers in District V.

56. Healthsouth has demonstrated that the patient origins of existing

providers in District V are quite distinct, notwithstanding Bayfront's desire to

market its CMR unit in areas as far away as north Pinellas County and throughout

the surrounding five counties. The expansion of Healthsouth's facility would

not have an adverse impact on the costs of providing CMR in District V because

all CMR providers are at or near capacity and maintain waiting lists. The

practical distance between Healthsouth and Bayfront does not favor cross-

utilization of these two providers.

57. Healthsouth provides its services at a reasonable cost. It had the

lowest average charge per case in 1991, while Bayfront had the lowest charge per

patient day. These figures will differ, however, based upon case mix and length

of stay.

58. Competition will be improved if capacity becomes available in the

district because third-party payors will have more options to negotiate

favorable rates for the specific services their clients need. Further, it is

more cost effective to permit CMR patients residing in north Pinellas County to

obtain their CMR treatment in the north so they can continue with their primary

care physicians attending to co-morbidity issues, thereby eliminating the need

for them to be assigned unfamiliar physicians at the cost of additional health

care dollars. Lastly, Healthsouth itself will increase the efficiency of its

hospital with the 20-bed addition, utilizing existing resources for new and

expanded programs and positively impacting its future charge structure.

59. The 1989 Florida State Health Plan is applicable to this proceeding.

It contains five preferences applicable to CMR programs. The first preference

is for conversion of excess acute care hospital beds. This preference does not

apply because Healthsouth, as a free-standing specialty hospital, has no acute

care beds for conversion.

60. Healthsouth satisfies the second preference which favors applicants

proposing specialty inpatient or outpatient rehabilitation services that are not

currently offered in the district. Healthsouth holds the only accreditations in

District V for five specialty CMR services. Additional CMR beds will allow

better utilization of those specialty services. Further, this application

provides for a designated pediatric unit and increases space available for

outpatient services.

61. Healthsouth satisfies the spirit of the third preference for teaching

hospitals by providing an educational and training facility for the various

clinical therapies and by offering the only program for training CRRNs in

District V.

62. The fourth preference for Medicaid and charity care disproportionate

share providers is not applicable to Healthsouth because specialty hospitals are

not eligible to apply for disproportionate share status. Healthsouth has,

however, exceeded its Medicaid and charity care commitment.

63. The fifth preference is for applicants proposing to provide outpatient

rehabilitation services. Healthsouth offers the only CARF specialty accredited

outpatient CMR program, which this application will allow for expansion of, and

the only brain injury day treatment program.

64. The 1990 District Health Plan of Pasco/Pinellas Local Health Council,

Inc., is the district health plan applicable to this proceeding. The first

preference relative to disproportionate share providers and the second

preference relative to converting medical/surgical beds are inapplicable, as

described above.

65. The third preference involving applicants who document why existing

providers are not meeting the needs of the community has been met by

Healthsouth. Healthsouth has demonstrated suppressed utilization and

overcrowding of existing providers, which forces patients into leaving the

district for care, forces them into inappropriate care settings, or forces them

to forego CMR services.

66. The final preference is for applicants who are existing providers if

the bed need shown by the fixed need rule is 20 beds or less. Healthsouth is an

existing 40-bed specialty inpatient CMR provider and would have met this

preference if the numeric need methodology could have been calculated based on

available beds, rather than including intentionally under-utilized beds.

67. District V utilization of CMR services increased 180 percent between

1987 and 1991 and has continued to grow. Overall district utilization has

increased more quickly than the increase in available CMR beds. However,

district-wide utilization data has been skewed by purposeful low utilization at

Bayfront and Sun Coast during the time examined by the numeric need methodology

rule.

68. The calculation of beds needed pursuant to the numeric need

methodology rule, using the reported district-wide occupancy rate of just below

57 percent due to the time period required in the calculation, produces a result

of zero beds needed. Yet, all providers in the district are at functional

capacity, and all maintain waiting lists. Moreover, the population of District

V can only be expected to increase between the time of the final hearing and the

1997 planning horizon involved in this proceeding.

69. The only logical conclusion is that the numeric need methodology rule

is a poor predictor of the need in District V for CMR beds as proposed by

Healthsouth. Residents of District V are being deprived of medically necessary

CMR services and reliance solely on the numeric need methodology rule will

prolong that deprivation. Residents in that district should not be required,

contrary to good health planning principles, to leave the district for services

or to accept lesser levels of service than their medical needs require.

70. The impact on Bayfront by the addition of the extra beds sought by

Healthsouth in this proceeding is minimal. Healthsouth's utilization

projections are reasonable, and it appears that the need for CMR services in

District V is sufficient to result in appropriate utilization of the additional

beds sought by Healthsouth and whatever portion of Bayfront's 48 operational CMR

beds it eventually makes available for CMR services. Although Bayfront

expressed concerns over its ability to retain and recruit appropriate staff,

there was no suggestion that Bayfront expects any difficulty in finding

appropriate staff for the additional beds it will bring into operation when it

adds physiatrists.

CONCLUSIONS OF LAW

71. The Division of Administrative Hearings has jurisdiction over the

parties hereto and the subject matter hereof. Section 120.57(1), Florida

Statutes.

72. As an applicant, Healthsouth has the burden of proving its entitlement

to the CON it is seeking. Boca Raton Artificial Kidney Center, Inc. v.

Department of Health and Rehabilitative Services, 475 So.2d 260 (Fla. 1st DCA

1985).

73. Section 381.705, Florida Statutes, and Rules 10-5.030 and 10-5.039,

Florida Administrative Code, provide the review criteria under which the Agency

is to determine whether an application for a CON should be approved. A balanced

consideration of all the criteria is required. North Ridge General Hospital,

Inc. v. NME Hospitals, Inc., 478 So.2d 1138 (Fla. 1st DCA 1985). The

appropriate weight to be given each criterion will vary depending on the facts

of each case. Balsam v. Department of Health and Rehabilitative Serivces, 486

So.2d 1341 (Fla. 1st DCA 1986).

74. An applicant may demonstrate need for a proposed project by

establishing numeric need under the rule methodology, and absent such a showing,

by the demonstration of special or "not normal" circumstances. NME Hospitals,

Inc. d/b/a Hollywood Medical Center v. Department of Health and Rehabilitative

Services, 494 So.2d 256 (Fla. 1st DCA 1986). In the instant case, there is no

need shown because of artificially suppressed occupancy at Sun Coast and

Bayfront resulting in a district-wide occupancy below the 85 percent threshold

for additional beds. Notwithstanding a fixed need pool projection of zero bed

need, the Agency has a history of approving CMR beds when other statutory and

rule criteria indicate need, and where special circumstances exist in the

district. Baptist Hospital of Miami, Inc. v. Agency for Health Care

Administration and Healthsouth Rehabilitation Corporation, 14 FALR 5000 (1992);

Capital Hospital Corporation v. Agency for Health Care Administration, 15 FALR

167 (1992).

75. Healthsouth has demonstrated six special circumstances which

substantiate the need in District V for additional CMR services:

(1) physician referral patterns and co-morbid conditions,

(2) travel barriers for the elderly,

(3) full capacity at all existing providers,

(4) Sun Coast's osteopathic licensure,

(5) unique specialty accreditations, and

(6) the need for pediatric CMR.

76. It has been established that 75 percent-80 percent of Healthsouth's

patients live in northern Pinellas County. The great majority of Bayfront's

patients, 91 percent, are from its immediate surrounding geographical area; it

has never served north Pinellas County residents to any notable degree. Even

with a second physiatrist, Bayfront's primary service area will remain constant

as will its high percentage of internal transfers due to its status as a

regional trauma center and its constant waiting list. District V has developed

distinct north and south medical communities with separate physician referral

patterns. With the population in northern Pinellas County growing more rapidly

than in the south, this special circumstance supports the approval of

Healthsouth's application.

77. CMR depends on an interdisciplinary team approach which includes

family members or caregivers as an integral part of a patient's rehabilitative

care. The caregiver must be trained in rehabilitative techniques and must

participate in the retraining of the patient if successful outcomes are to be

derived. Pinellas County is the most densely populated county in the state and

has the largest percentage of residents over the age of 65. The weight of the

medical evidence is that travel between north and south Pinellas County is

inappropriate, if not impossible, for the elderly population served.

78. Physician referral patterns cannot accommodate travel from north to

south Pinellas County to maintain continuity of care for patients with co-

morbidities. It is unrealistic to expect physicians to spend one and one-half

to two hours a day traveling to follow patients. Considering the age group of

the majority of CMR patients and the inherent difficulties in mobility, co-

morbidity, and other factors relating to that age group, it is a medical

necessity that additional beds be located in an area accessible to those

patients and their families which will promote, rather than hinder, physicians'

and caregivers' ability to visit, treat, be educated regarding, and support

those patients' ongoing rehabilitation. Recognition of distinct north-south

referral patterns and an inability to travel across a district has been

recognized by case law. South Broward Hospital District d/b/a Memorial Hospital

v. Department of Health and Rehabilitative Services, 14 FALR 3194 (1992).

79. One method of demonstrating special or "not normal" circumstances is

by showing that the existing facilities are unavailable or inaccessible.

Humana, Inc., d/b/a Cypress Community Hospital v. Department of Health and

Rehabilitative Services, 492 So.2d 388 (Fla. 4th DCA 1986); Baptist Hospital of

Miami, Inc. v. Agency for Health Care Administration, 14 FALR 5000 (1992).

Bayfront and Sun Coast are functionally full. Riverside is effectively full,

operating above 85 percent occupancy and serving the needs of Pasco County.

Healthsouth is operating at peak capacity. Doctors have experienced a

continuing inability to get appropriate patients into CMR beds in a timely and

medically satisfactory manner, often forcing them to choose an inappropriate

placement. The consensus among the physician witnesses was that there is a

serious adverse affect on patient care and outcomes caused by this

inaccessibility of CMR beds. The full occupancy at all existing providers

constitutes a special circumstance justifying the granting of Healthsouth's

application.

80. Any beds available at Sun Coast's osteopathic CMR unit should not be

considered on the basis of that facility's osteopathic license. Its patient

referral base is driven primarily by internal transfers as well as by referrals

from other osteopathic providers. Sun Coast is experiencing growth beyond its

ability to accommodate patients in need of osteopathic CMR.

81. The bed need methodology contained in Rule 10-5.039, Florida

Administrative Code, presumes allopathic and osteopathic CMR providers may meet

each other's needs interchangeably, though this is far from accurate. The

availability of osteopathic CMR beds should not be considered when determining

the need for allopathic CMR beds in District V and constitutes a special

circumstance supporting the approval of Healthsouth's application.

82. Healthsouth offers five CARF accredited specialty CMR services offered

nowhere else in District V. Overcrowding has hampered Healthsouth's ability to

offer those services. The specialty accreditations offered by Healthsouth

constitute special circumstances justifying approving this CON application.

83. Further, Healthsouth proposes to offer pediatric CMR which is not

available in District V despite its need. Currently, District V has a pediatric

population of 190,000. These children must leave the district if CMR care is to

be rendered. This population generates a need sufficient to maintain an 8-bed

unit such as the one Healthsouth proposes. This special circumstance warrants

the award of a certificate of need.

84. The above-described special circumstances do not contemplate

imposition of an impermissible need methodology. Moreover, it is clear that the

rule methodology is not the best indicator of need for CMR in District V because

of intentional suppression of beds by providers who simultaneously maintain

waiting lists; out-migration of CMR patients; the need for specialty services; a

distinct north-south physician referral pattern and staff privileges; and the

difficulty of inpatient, caregiver and family travel resulting in barriers to

accessing CMR care. Other certificates of need have been awarded based on such

special circumstances. Accordingly, Healthsouth's application meets the

disputed criteria in Rule 10-5.039(2)(b), (2)(c)2., and (2)(c)3., Florida

Administrative Code.

85. In addition to the demonstration of need required by the rule

methodology for CMR, Section 381.705, Florida Statutes, provides review

criteria. Only some of the statutory criteria are in dispute in this cause.

The remainder have not been considered in this Recommended Order.

86. Section 381.705(1)(a) requires review of the application in relation

to the applicable State and District Health Plans. Healthsouth's proposal is

consistent with both plans, as to those criteria which apply to a free-standing

specialty hospital. Healthsouth satisfies the preference which favors

applicants proposing specialty inpatient or outpatient rehabilitation services

not currently offered in the District by offering pediatric CMR services and by

expanding overcrowded specialty programs only available at Healthsouth.

87. Healthsouth satisfies the spirit of the preference for hospitals

providing training and educational services through its community re-entry

programs, its internship training in the various clinical therapies, and its

program for training CRRNs, the only such program in District V.

88. The preference for outpatient follow-up rehabilitation services is

satisfied by Healthsouth's outpatient CMR program and its provision of the only

head injury day treatment program in District V. Both are the only District V

outpatient CMR programs which hold CARF specialty accreditations.

89. Healthsouth established that patient needs are not being met and that

like and existing services are inadequate and unavailable. A legitimate basis

for treating District V, primarily Pinellas County, as two distinct communities

and not as a whole was established. Such service area delineations have been

previously recognized. South Broward Hospital District, supra. The special

circumstances of continuity of care, physician referral patterns, and medical

staff relationships which exist in District V, as well as limitations on

patients' and caregivers' ability to safely travel due to their age, infirmities

and the population density, require the conclusion that Bayfront cannot serve as

an alternative to the need for additional beds in northern Pinellas County.

This need can only be alleviated by the approval of Healthsouth's application.

90. The availability of like and existing services is also inadequate

based upon current utilization of providers and the out-migration occurring from

District V. Healthsouth operates at 97 percent utilization, and Riverside is at

85 percent utilization. Sun Coast reached an average daily census of 15, only

four months after increasing its beds to 15. Healthsouth, Bayfront, and Sun

Coast maintain waiting lists.

91. Like and existing services are also not available for the specialties

Healthsouth proposes. There are no alternatives to Healthsouth's expansion

because it is in the unique posture of serving the community as the only CMR

facility in District V offering its five CARF-accredited specialty services.

Compliance with Section 381.705(1)(b), Florida Statutes, is met.

92. Other health care services in the district are not reasonable

alternatives for patients needing CMR care. Medical testimony has demonstrated

that nursing homes, outpatient care, and home health care are inappropriate,

inadequate and unsatisfactory alternatives resulting in longer lengths of stay

and poorer outcomes. Compliance with Section 381.705(1)(d) is met.

93. Healthsouth functions as an educational training site for CRRNs, as

well as for students in clinical therapies, including occupational, physical,

recreational, and speech therapy. Healthsouth established the need for

educational and training facilities at the student internship training level and

that the approval of its application will expand student teaching opportunities.

Healthsouth also presented expert testimony that the need for such training

sites has increased. Compliance with Section 381.705(1)(g) is met.

94. The financial feasibility of Healthsouth's project was disputed only

as to the reasonableness of its projected utilization for the expanded facility.

Healthsouth has established the short and long term financial feasibility of its

project through reasonable projections on utilization of the additional 20 beds

by demonstrating the high utilization of CMR providers, waiting lists, out-

migration, and the need for pediatric services in District V. Compliance with

Section 381.705(1)(i) is met.

95. Healthsouth's application will not negatively affect competition among

existing CMR providers nor will it increase costs associated with CMR services.

Current provider occupancies are so high; existing providers are so removed in

terms of distance, philosophy of science, and specialties offered; and

suppressed demand coupled with out-migration is so significant, that the

approval of this application will not negatively impact competition or the cost

of care in District V.

96. Healthsouth provides its services at a reasonable cost, and it can

operate more cost effectively at 60 beds than 40, allowing for utilization of

existing resources for expanded programs. The costs of CMR services could

improve if beds are made available in the District allowing third-party payors

the option of negotiating rates for the specific services they seek. Section

381.705(1)(i), Florida Statutes, is met.

97. Healthsouth has a commitment to the provision of Medicaid and indigent

care services, exceeding its CON condition of 3 percent and maintaining an

average of 4 percent during its history. Further, Healthsouth presented

credible evidence that its Medicaid and indigent care provision has increased to

over 7 percent and that it has never refused a patient based on inability to

pay. Healthsouth's ability to provide Medicaid and indigent care services would

be improved by the addition of 20 CMR beds to its facility which would allow

expansion of its brain injury and spinal cord injury programs, most often

populated by younger and often indigent patients. Compliance with Section

381.705(1)(n) is met.

98. Healthsouth's application is consistent with the review criteria

contained within Section 381.705, Florida Statutes. Although the numeric need

computation found in Rule 10-5.039, an additional review criterion, reflects no

numeric need, Healthsouth has proven various special circumstances, as permitted

by that Rule, requiring that additional CMR beds be made available in the manner

set forth in Healthsouth's application.

RECOMMENDATION

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

therefore,

RECOMMENDED that Healthsouth's application for Certificate of Need No. 6932

for an additional 20 CMR beds be granted.

DONE and ENTERED this 28th day of May, 1993, at Tallahassee, Florida.

___________________________________

LINDA M. RIGOT

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 28th day of May, 1993.

APPENDIX TO RECOMMENDED ORDER

DOAH CASE NO. 92-5099

1. Healthsouth's proposed findings of fact numbered 1-41, 43-98, and 101

have been adopted either verbatim or in substance in this Recommended Order.

2. Healthsouth's proposed findings of fact numbered 42, 99, and 100 have

been rejected as not constituting findings of fact but rather as constituting

argument of counsel, conclusions of law, or recitation of the testimony.

3. Healthsouth's proposed finding of fact numbered 102 has been rejected

as being unnecessary to the issues involved herein.

4. The Agency and Bayfront's proposed findings of fact numbered 2-13, 18,

20-24, 31-33, 35, 36, 38, 41-44, 48, 49, 51, 52, 54, 56, 59, 64, 66, 67, 69, 71,

72, 75, 79-81, 83-85, 115, 120, 127, 135-137, 146, 147, 149, 151, 152, 161, and

163 have been adopted either verbatim or in substance in this Recommended Order.

5. The Agency and Bayfront's proposed findings of fact numbered 14, 26-30,

46, 47, 61, 63, 100, 101, 103, 104, 113, 114, 118, 126, and 164 have been

rejected as not constituting findings of fact but rather as constituting

argument of counsel, conclusions of law, or recitation of the testimony.

6. The Agency and Bayfront's proposed findings of fact numbered 1, 15-17,

19, 34, 50, 53, 57, 58, 60, and 62 have been rejected as being unnecessary to

the issues involved herein.

7. The Agency and Bayfront's proposed findings of fact numbered 37, 40,

45, 55, 76-78, 91, 92, 107, 108, 110-112, 132-134, 138, 141, 142, 150, 155, 156,

158-160, and 162 have been rejected as not being supported by the weight of the

competent evidence in this cause.

8. The Agency and Bayfront's proposed findings of fact numbered 39, 65,

68, 70, 73, 74, 82, 86-90, 94-99, 102, 105, 106, 109, 116, 117, 119, 128-131,

139, 140, 144, 145, 148, 153, 154, 157, 165 and 166 have been rejected as being

subordinate to the issues herein.

9. The Agency and Bayfront's proposed findings of fact numbered 25, 93,

121-125, and 143 have been rejected as being irrelevant to the issues under

consideration in this cause.

COPIES FURNISHED:

Thomas F. Panza, Esquire

Susan Horovitz Maurer, Esquire

Panza, Maurer, Maynard,

Platow & Neel, P.A.

3081 East Commercial Boulevard

Fort Lauderdale, Florida 33308

Edward Labrador, Esquire

Agency for Health Care Administration

Fort Knox Executive Center

2727 Mahan Drive

Tallahassee, Florida 32308

Stephen A. Ecenia, Esquire

Rutledge, Ecenia, Underwood & Purnell, P.A.

Barnett Bank Building, Suite 500

Post Office Box 551

Tallahassee, Florida 32302-0551

Sam Power, Agency Clerk

The Atrium, Suite 301

325 John Knox Road

Tallahassee, Florida 32303

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended

Order. All agencies allow each party at least 10 days in which to submit

written exceptions. Some agencies allow a larger period within which to submit

written exceptions. You should contact the agency that will issue the final

order in this case concerning agency rules on the deadline for filing exceptions

to this Recommended Order. Any exceptions to this Recommended Order should be

filed with the agency that will issue the final order in this case.

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

AGENCY FINAL ORDER

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

STATE OF FLORIDA

AGENCY FOR HEALTH CARE ADMINISTRATION

HEALTHSOUTH REHABILITATION OF

FLORIDA, INC.,

Petitioner, CASE NO.: 92-5099

93-1638

vs. CON NO.: 6932

RENDITION NO.: AHCA-93-140-S-CON

STATE OF FLORIDA, AGENCY FOR

HEALTH CARE ADMINISTRATION,

Respondent,

and

BAYFRONT MEDICAL CENTER, INC.,

Intervenor.

______________________________/

FINAL ORDER

The parties executed a Stipulation and Settlement Agreement resolving all

disputed issues.

Upon consideration of the foregoing, the Stipulation and Settlement

Agreement dated August 18, 1993, is adopted and incorporated by reference, and

the agency's file is CLOSED.

DONE and ORDERED this 18th day of October 1993, in Tallahassee, Florida.

______________________________

Douglas M. Cook, Director

Agency for Health Care Administration

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

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

THE AGENCY CLERK OF AHCA, 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.

Copies furnished to:

Thomas F. Panza, Esquire

Susan Horovitz Maurer, Esquire

PANZA, MAURER, MAYNARD, PLATOW & NEEL, P.A.

3081 East Commercial Boulevard

Fort Lauderdale, Florida 33308

Edward Labrador, Esquire

Senior Attorney, Agency for Health Care Administration

325 John Knox Road, Suite 301

Tallahassee, Florida 32303-4131

Stephen A. Ecenia, Esquire

RUTLEDGE, ECENIA, UNDERWOOD & PURNELL, P.A.

Barnett Bank Building, Suite 420

Post Office Box 551

Tallahassee, Florida 32302-0551

Linda M. Rigot

Hearing Officer

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

Elizabeth Dudek (AHCA/CON)

Elfie Stamm (AHCA/CON)

Alberta Granger (AHCA/CON)

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing has been

furnished to the above named people by U.S. Mail this 18th day of October, 1993.

______________________________

R. S. Power, Agency Clerk

State of Florida, Agency for

Health Care Administration

325 John Knox Road

The Atrium Building, Suite 301

Tallahassee, Florida 32303

[phone]

STATE OF FLORIDA

AGENCY FOR HEALTH CARE ADMINISTRATION

HEALTHSOUTH REHABILITATION OF

FLORIDA, INC.,

Petitioner, CASE NO.: 92-5099

CON NO.: 6932

vs.

AGENCY FOR HEALTH CARE

ADMINISTRATION,

Respondent,

and

BAYFRONT MEDICAL CENTER, INC.,

Intervenor.

_________________________________/

NOTICE OF WITHDRAWAL

COMES NOW, the Petitioner, HEALTHSOUTH REHABILITATION OF FLORIDA, INC.

(hereinafter "HealthSouth"), by and through their undersigned counsel, and files

this Notice of Withdrawal of the above-styled case and would further state as

follows:

1. That this Notice of Withdrawal is made pursuant to a Stipulation and

Settlement Agreement entered into between HealthSouth and Respondent, AGENCY FOR

HEALTH CARE ADMINISTRATION (hereinafter "AHCA"), and Intervenor. BAYFRONT

MEDICAL CENTER, INC. (hereinafter "Bayfront"), made pursuant to s. 120.57(3),

Florida Statutes, on August 18, 1993.

2. That this Notice of Withdrawal does not relinquish HealthSouth's

request for Agency action in this proceeding. Instead, this withdrawal is

intended to facilitate the Stipulation and Settlement Agreement entered into by

HealthSouth, AHCA and Bayfront on August 18, 1993 and is contingent upon the

Agency's issuance of CON 6932.

WHEREFORE, under the terms and conditions stated above, HealthSouth hereby

withdraws its Petition for Formal Administrative Hearings in this matter,

pursuant to stipulation between AHCA and Bayfront, attached as Exhibit "A".

PANZA, MAURER, MAYNARD,

PLATOW & NEEL, P.A.

Attorneys for HealthSouth

Rehabilitation of Florida, Inc.

and HealthSouth Rehabilitation

Corporation, Inc.,

Suite 200

3081 E. Commercial Blvd.

Ft. Lauderdale, Florida 33308

[phone]

By:______________________________

SUSAN HOROVITZ MAURER, ESQ.

FLORIDA BAR NO. 307750

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing was sent via

overnight mail to R. S. Power, Agency Clerk, State of Florida, Agency for Health

Care Administration, 325 John Knox Road, The Atrium Building, Suite 301,

Tallahassee, Florida 32393-4131; and by regular mail to Edward Labrador, Esq.,

Counsel for Agency for Health Care Administration, The Atrium Building, Suite

301, 325 John Knox Road, Tallahassee, FL 32303-4131; and Stephen A. Ecenia,

Esq., Rutledge, Ecenia, Underwood & Purnell, P.A., Barnett Bank Building, Suite

500, P.O. Box 551, Tallahassee, Florida 32302-0551 this 26th day of August,

1993.

______________________________

SUSAN HOROVITZ MAURER, ESQ.

STATE OF FLORIDA

AGENCY FOR HEALTH CARE ADMINISTRATION

HEALTHSOUTH REHABILITATION

OF FLORIDA, INC.,

Petitioner, CASE NO.: 92-5099

CON NO.: 6932

vs.

AGENCY FOR HEALTH CARE

ADMINISTRATION,

Respondent,

and

BAYFRONT MEDICAL CENTER, INC.,

Intervenor.

_________________________________/

STIPULATION AND SETTLEMENT AGREEMENT

This Stipulation and Settlement Agreement ("Agreement") is entered into by

and between the Petitioner, HEALTHSOUTH REHABILITATION OF FLORIDA, INC.

(hereinafter "HealthSouth"), the Respondent, AGENCY FOR HEALTH CARE

ADMINISTRATION (hereinafter "AHCA"), the Intervenor, BAYFRONT MEDICAL CENTER,

INC. (hereinafter "Bayfront"), who by and through their undersigned counsel, do

hereby stipulate and agree this 18th day of August, 1993, as follows:

WHEREAS HealthSouth is a 40-bed freestanding inpatient specialty hospital

which offers comprehensive medical rehabilitation (hereinafter "CMR"), to the

patient population of AHCA Service District V; and

WHEREAS the AHCA is the Agency affected which regulates and issues

Certificates of Need for CMR services; and

WHEREAS Bayfront is an existing provider of CMR services in AHCA District V

with authorization to operate 60 CMR beds at its facility; and

WHEREAS on March 23, 1992, HealthSouth filed an Application for Certificate

of Need No. 6932 to add 20 CMR beds to its existing 40-bed freestanding

specialty rehabilitation hospital located in Largo, Florida, in AHCA Service

District V; and

WHEREAS on July 6, 1992, the AHCA issued a State Agency Action Report

denying HealthSouth's application for CON 6932; and

WHEREAS HealthSouth filed a Petition for Formal Administrative Hearing and

a Formal Administrative Hearing was held December 7 through December 10, 1992,

protesting AHCA's denial of CON 6932; and

WHEREAS on May 28, 1993, the Division of Administrative Hearings issued a

Recommended Order recommending the grant of HealthSouth's application for

Certificate of Need No. 6932 for an additional 20 CMR beds; and

WHEREAS the Recommended Order issued by the Division of Administrative

Hearings does not constitute final agency action; and

WHEREAS the parties now desire to amicably settle this matter to avoid

further litigation and expense.

NOW THEREFORE, in consideration of the mutual covenants contained herein,

and other valuable consideration, the sufficiency of which is acknowledged by

all parties, it is hereby stipulated and agreed by and between the parties as

follows:

1. This agreement is entered into by and between the parties pursuant to

Section 120.57(3), Florida Statutes (Supp. 1992).

2. The parties agree the Recommended Order issued by the Division of

Administrative Hearings on May 28, 1993, shall not be adopted as a Final Order.

3. The parties acknowledge that comprehensive medical rehabilitation

services and beds are a tertiary service pursuant to Section 408.032(20),

Florida Statutes (Supp. 1992).

4. The parties agree that AHCA District V is not divided into distinct

north and south service areas for the provision of tertiary care services such

as CMR.

5. The parties agree that CMR is not separated into osteopathic and

allopathic categories. The parties further agree that the need for additional

CMR beds must take into account all of the licensed CMR beds authorized to be

operated by existing CMR providers.

6. The parties also agree that the calculation of occupancy rates pursuant

to Rule 59C-1.039 (old rule), which was applicable to this proceeding, includes

all licensed beds, not just those which are in operation.

7. HealthSouth hereby acknowledges that Bayfront is an existing CMR

provider in District V and that Bayfront is authorized to operate 60 licensed

CMR beds.

8. AHCA agrees to issue CON 6932 to HealthSouth for the addition of 20 CMR

beds at its specialty hospital located in Largo, Florida, which Certificate of

Need will include the following conditions: 1) HealthSouth shall provide three

(3) percent of total annual patient days to Medicaid and charity patients; 2)

HealthSouth shall dedicate an eight (8)-bed pediatric CMR unit; 3) HealthSouth

shall maintain inpatient brain injury and spinal cord injury programs.

9. Upon the execution of this agreement, HealthSouth agrees to withdraw

its petitions for formal administrative hearing in Case Nos. 92-5099, 93-1628,

and 93-2247RX. Upon such dismissal, AHCA agrees to issue a final order granting

HealthSouth CON 6932 for the addition of 20 comprehensive medical rehabilitation

beds at its facility in Largo, Florida, AHCA District V.

10. The parties agree to bear their own costs and attorneys' fees in

connection with this proceeding.

11. AHCA, HealthSouth, and Bayfront stipulate and agree that this

Stipulation and Settlement Agreement is a legal and binding document and is

fully enforceable against all parties in any court of competent jurisdiction.

The signators hereto represent and warrant that they are vested with the

authority to execute this Stipulation and Settlement Agreement on behalf of

their respective principals, and as duly designated representatives, to fully

bind such principals.

STIPULATED and AGREED to the first date written above.

PANZA, MAURER, MAYNARD, AGENCY FOR HEALTH CARE

PLATOW & NEEL, P.A. ADMINISTRATION

Attorneys for HealthSouth 325 John Knox Road

Rehabilitation of The Atrium Building

Florida, Inc. Suite 301

3081 E. Commercial Blvd. Tallahassee, FL 32303

Suite 200 [phone]

Ft. Lauderdale, FL 33308

[phone]

By:___________________________ By:___________________________

THOMAS F. PANZA, Esquire EDWARD G. LABRADOR, Esquire

Senior Attorney

RUTLEDGE, ECENIA, UNDERWOOD & PURNELL, P.A.

Attorneys for Bayfront Medical Center, Inc.

Barnett Bank Bldg., Suite 500

Post Office Box 551

Tallahassee, FL 32302-0551

[phone]

By:___________________________

STEPHEN A. ECENIA, Esquire