95-002319CON Brookwood-Extended Care Center Of Homestead vs. Mount Sinai Medical Center Of Greater Miami, Inc., D/B/A Mount Sinai Medical Center Status: Closed Recommended Order on Thursday, March 13, 1997.

Summary: Nursing home Certificate Of Need (CON) approved in area of high over-age-75 population at statutory teaching hospital. Consider donations for financial feasibility.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BROOKWOOD-EXTENDED CARE )

CENTER OF HOMESTEAD, )

)

Petitioner, ) CASE N O . 95-2319

)

vs. )

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, and MOUNT )

SINAI MEDICAL CENTER OF )

GREATER MIAMI, INC., d/b/a )

MOUNT SINAI MEDICAL CENTER, )

)

Respondents. )

________________________________)

FLORIDA CONVALESCENT ASSOCIATES )

d/b/a PALM GARDEN OF NORTH )

MIAMI, )

)

Petitioner, ) CASE N O . 95-2322

)

vs. )

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, and MOUNT )

SINAI MEDICAL CENTER OF )

GREATER MIAMI, INC., d/b/a )

MOUNT SINAI MEDICAL CENTER, )

)

Respondents. )

________________________________)

MIAMI JEWISH HOME AND HOSPITAL )

FOR THE AGED, INC., )

)

Petitioner, ) CASE N O . 95-2326

)

vs. )

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, and MOUNT )

SINAI MEDICAL CENTER OF )

GREATER MIAMI, INC., d/b/a )

MOUNT SINAI MEDICAL CENTER, )

)

Respondents. )

________________________________)

MOUNT SINAI MEDICAL CENTER OF )

GREATER MIAMI, INC., d/b/a )

MOUNT SINAI MEDICAL CENTER, )

)

Petitioner, ) CASE N O . 95-2997

)

vs. )

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, FLORIDA )

CONVALESCENT ASSOCIATES (PALM )

GARDEN OF NORTH MIAMI) and )

BROOKWOOD EXTENDED CARE CENTER )

OF HOMESTEAD, )

)

Respondents. )

________________________________)

RECOMMENDED ORDER

This case was heard by Eleanor M. Hunter, the Administrative

Law Judge, the Division of Administrative Hearings, in

Tallahassee, Florida, from January 8-12, 16-19, 22, 23, 26, 29-

31, 1996.

APPEARANCES

For Petitioner, Theodore E. Mack, Esquire

Brookwood- Cobb, Cole and Bell

Extended Care 131 North Gadsden Street

of Homestead: Tallahassee, Florida 32301

For Petitioner, Frank P. Rainer, Esquire

Florida Gerald B. Sternstein, Esquire

Convalescent Ruden, Barnett, McClosky, Smith

Associates: Schuster and Russell, P.A.

Monore-Park Tower, Suite 815

215 South Monroe Street

Tallahassee, Florida 32301

For Petitioner, Paul H. Amundsen, Esquire

Miami Jewish Rodolfo Nunez, Esquire

Home and Richard Moore, Esquire

Hospital for Amundsen and Moore

the Aged, Inc.: 502 East Park Avenue

Tallahassee, Florida 32301

For Respondent: Lesle y Mendelson, Esquire

Agency For Mark Thomas, Esquire

Health Care Agency For Health Care Administration

Administration: 2727 Mahan Drive

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

For Respondent, Geoffrey Smith, Esquire

Mount Sinai R. Terry Rigsby, Esquire

Medical Center F. Philip Blank, Esquire

of Greater Blank, Rigsby and Meenan, P.A.

Miami: Post Office Drawer 11068

Tallahassee, Florida 32302-3068

STATEMENT OF THE ISSUES

Whether the CON application of Brookwood, Mount Sinai, or

FCA should be approved to meet the need for 60 additional

community nursing home beds in Dade County, Florida.

PRELIMINARY STATEMENT

In October 1994, the Agency For Health Care Administration

(AHCA) published a fixed numeric need for 70 additional community

nursing home beds in District 11, Subdistrict 1, for Dade County,

Florida. Following the review of a number of applications, AHCA

preliminarily approved the issuance of CON 7982 for a 10-bed

hospital-based skilled nursing unit for Miami Beach Healthcare

Group, Ltd. d/b/a Miami Heart Institute (“Miami Heart”). Eight

petitioners voluntarily dismissed their petitions in this

proceeding, and all remaining parties withdrew challenges to the

issuance of the Miami Heart CON, agreeing that the fixed numeric

need is reduced to 60 nursing home beds.

AHCA also preliminarily approved the issuance of CON 7978 to

Mount Sinai Medical Center of Greater Miami, Inc., d/b/a Mount

Sinai Medical (Mount Sinai) to construct a 60-bed free-standing

skilled nursing home on a campus which includes an acute care

hospital. Miami Jewish Home and Hospital for the Aged, Inc.,

(MJH) filed a petition challenging the preliminary approval of

the Mount Sinai application.

AHCA preliminarily denied two applications by Brookwood-

Extended Care Center of Homestead (Brookwood) for CON 7984 to add

either 60 or 30 beds to an existing nursing home. At the final

hearing, Brookwood withdrew its 30-bed partial application. AHCA

also preliminarily denied the application of Florida Convalescent

Associates d/b/a Palm Garden of North Miami Beach (FCA) for CON

7980 to add 60 skilled nursing beds and 19 assisted living beds

to an existing nursing home.

At the final hearing, Brookwood presented the testimony of

Kenneth Gummels, expert in development, management, operations,

and financing, including the cost of construction of nursing

homes; Allen Ray McGinnis, expert in architecture and

construction costs; Steven Jones, expert in nursing home

accounting and costs; Gene Nelson, expert in health planning; and

Carmen Telot, expert in nursing home administration and quality

of care. Brookwood’s exhibits 1-5 were received in evidence.

Mount Sinai presented the testimony of Fred Hirt, expert in

the operation and administration of nursing homes and of acute

care hospitals; Jerome Goebel, expert in architectural design for

health care related projects and nursing homes, and construction

cost estimating; Gloria Bass Weinberg, M.D., expert in internal

medicine, geriatrics, and medical education; Deborah Hurwitz,

expert in clinical social work, gerontological social work, and

social work for Alzheimers’ patients; Ellen Redick, R.N.; Betty

Ann Taylor, R.N., expert in nursing education and nursing quality

of care; Charles William Kipp, Ph.D., expert in social work,

social work education, and gerontological social work; Carl

Eisdorfer, M.D., Ph.D., expert in geriatric psychiatry, care of

patients with Alzheimer’s disease and related dementia, and

medical education; Virginia B. Goldman, R.N., expert in nursing,

nursing supervision, staffing, and quality of care; Robert

Danielson; Daniel Sullivan, expert in health planning, health

care finance, and financial feasibility analysis. In addition to

witnesses who testified in the case-in-chief, Mount Sinai

presented the testimony on rebuttal of Yehuda Ben-Horin and James

L. Bernier, expert in disaster preparedness and emergency

management, with particular expertise in hurricane preparedness.

Mount Sinai’s exhibits 1-4a, 6-28 and 30-42 were received in

evidence. The parties were allowed to brief the admissibility of

Exhibit 5, letters of support in Mount Sinai’s application, and

their admissibility is to be resolved in this Recommended Order.

AHCA presented the testimony of Elizabeth Dudek, expert in

health planning and CON review. AHCA’s exhibits 2-7 were

received in evidence.

MJH presented the testimony of Daniel T. Brady, expert in

health care administration and adult day care administration;

Charles Beber, M.D., expert in geriatric medicine and teaching

programs in geriatric medicine; Brenda McKenzie, expert in

geriatric nursing, nurse education and training, and nusring

administration; Guy E. Daines, expert in emergency management and

hurricane evacuation planning and preparedness with special

expertise in evacuation planning and preparedness for medical

facilities; Sara A. Bishop, expert in hurricane evacuation

planning and preparedness, with expertise in medical facilities;

Francine Foley Hennessey, R.N., expert in nursing and nursing

home administration; Christopher Macey, expert in site planning

and site assessment, including cost analysis; Marilyn Goldaber,

expert in gerontological social work; Loudes A. Boue, expert in

health care finance and nursing home finance; Jose Estevez,

expert in health care architectural designs; Sharon Gordon-

Girvin, expert in health care planning, including CON review and

health care planning for nursing homes; Terry Goodman, expert in

nursing home administration; and Darryl Weiner, expert in health

care finance, including financial feasibility. MJH’s exhibits 2-

4, 7, 9-13, 15-18, 20-23, 25-32, 34, 37, 40-48 and 52-55, were

received in evidence.

The final volume of the transcript was filed on April 30,

1996. On May 20, 1996, Brookwood, Mount Sinai, MJH and AHCA

filed proposed recommended orders. FCA filed a proposed

recommended order on May 21, 1996, technically a day late, but

considered because of the issues raised concerning the fairness

of the timing of the disposition of Mount Sinai’s Motion For

Summary Recommended Order.

Mount Sinai’s Exhibit 5

During the final hearing, ruling was reserved on the

admissibility of Mount Sinai’s exhibit 5. Mount Sinai filed a

Memorandum of Law On The Admissibility of the exhibit, on May 20,

1996. MJH filed a memorandum of law in support of its hearsay

objection to exhibit 5, on June 3, 1996. Exhibit No. 5 consisted

of letters of support for Mount Sinai’s CON application from

persons who serve both MJH and Mount Sinai as officers and

directors. Mount Sinai contends that exhibit 5 represents an

exception to the hearsay law, as admissions by or on behalf of

MJH, based on the fiduciary relationship of officers/directors of

the corporation. Mount Sinai also contends that the letters

corroborate its witnesses’ and/or impeach MJH’s witnesses’

testimony regarding the adverse impact on MJH from the approval

of Mount Sinai’s CON.

MJH argues that the letters, dated Nove mber and December

1994, do not constitute admissions against interest because none

of the letter writers claims to be representing MJH, because the

statements are not made within the scope of their employment, and

because they cannot be used both to represent MJH and Mount Sinai

(to corroborate Mount Sinai’s officers/directors and to impeach

MJH’s). MJH also describes the letters as inherently unreliable

based on the dates written and the available information on the

Mount Sinai proposal at that time.

Ba sed on the arguments of counsel at hearing and in

memoranda, Mount Sinai’s exhibit 5 is received in evidence, as

hearsay which cannot be the basis for a finding of fact without

corroboration.

Mount Sinai’s Motion For Summary Recommended Order Dismissing FCA

On December 28, 1995, Mount Sinai filed a Motion For Summary

Recommended Order dismissing FCA. Mount Sinai moved to dismiss

FCA for failing to include the cost for the first floor of its

two story addition on schedule 2 of the application, the listing

of planned capital projects. FCA filed a response in opposition

to the motion on January 5, 1996.

The motion was heard on the first day of the final hearing,

January 8, 1996. FCA, in its proposed recommended order, notes

that the Prehearing Stipulation was altered by counsel for AHCA

after it was signed by counsel for FCA. AHCA’s attorney inserted

Mount Sinai’s Motion To Dismiss under the heading of Pending

Motions when the Prehearing Stipulation was circulated to her for

her signature. FCA contends that the Prehearing Stipulation was

an improper substitute for a notice of hearing. Counsel

apparently failed to meet together to prepare the Prehearing

Stipulation as required by paragraph 3 of the Prehearing Order

and Order of Consolidation issued on May 12, 1995. Rule 60Q-

2.016, Florida Administrative Code , authorizes rulings on motions

after the time for responses, with or without oral argument. The

rule also authorizes rulings on dispositive motions to be

incorporated in the recommended order.

FCA did not dispute the facts that (1)its CON proposed a two

story addition to an existing nursing home with 60 nursing beds

on the second floor, and therapy spaces and assisted living beds

on the first floor; (2) that the total building cost shown on

schedule 1 is $1,931,000 with a total project cost of $2.7

million; (3) that the cost is estimated at $85 a square foot for

19,352 square feet; (4) that FCA’s architectural plans show

19,352 square feet for the second floor of the addition and, on

the first floor, an additional 3,865 square feet for therapy

areas, and 17,487 square feet for the 19 adult congregate living

beds; and (5) that the cost for the first floor project is not

included in the $2.7 million shown on schedule 2.

FCA asserted that there was factual dispute concerning

whether FCA’s Board of Directors had approved the first floor

project and had given authorization to execute the ACLF portion,

because “ . . . the architect in this matter basically took this

on his own initiative to propose this ACLF project . . .”

(Transcript, p.43). In addition, FCA noted that the schematic

design included in a CON application will have changes prior to

construction, and that ACLF beds do not require CON approval. In

this application, the ACLF beds are not offered as a condition

for approval of the 60-bed addition. FCA “ . . .would not

dispute that those - - the cost of the build-out of those [ACLF]

beds had not been included, but the question is whether there

were sufficient funds, sufficient project costs, to construct a

first floor and then a completed second floor for this project.”

(Transcript, p. 48).

The statutory requirement for a list of capital projects is

as follows:

408.037 Application content. - An application

for a certificate of need shall contain:

(2) A statement of the financial resources

needed by and available to the applicant to

accomplish the proposed project. This

statement shall include:

(a) A complete listing of all capital

projects, including new health facility

development projects and health facility

acquisitions applied for, pending, approved,

or underway in any state at the time of

application, regardless of whether or not

that state has a certificate-of-need program

or a capital expenditure review program

pursuant to s.1122 of the Social Security

Act. . . . This listing shall include the

applicant’s actual or proposed financial

commitment to those projects and an

assessment of their impact on the applicant’s

ability to provide the proposed project.

Rule 59C-1.008(h) requires the l isting of projects approved

via authorization to execute. The fact that a project was not

CON-reviewable did not excuse the applicant from including a

project on schedule 2 in Central Florida Regional Hospital v.

DHRS , 13 FALR 350, DOAH Case No. 90-1526 (1990). The fact that a

project might later be changed or require additional approval

before expenditures were made was not a valid basis for omitting

a project from schedule 2 in University Community Hospital v.

DHRS, et al. , DOAH Cases Nos. 91-1510 and 91-1511 (R.O. 3/19/92).

“While the Executive Committee required an additional review of

individual budget items costing more than $25,000 prior to

actually being purchased, [the hearing officer concluded that]

these purchases are nonetheless planned, and thus pending, at the

time that UCH filed its application by virtue of being included

in final UCH budget, the hospital’s planning document.” (R.O. at

p. 9).

AHCA supported Mount Sinai’s Motion To Dismiss, arguing that

any evidence on the factual issues raised by FCA - whether the

ACLF is authorized or would also be constructed, whether the

entire project could be built for the cost estimated for the

second floor - would be inadmissible, impermissible amendments to

the application. AHCA relied on Manor Care, Inc. of Sarasota v.

DHRS , 558 So.2d 26 (Fla. 1 st DCA 1989), in which the applicant’s

proposal to redesign a nursing home from three to two person

bedrooms with a twenty percent increase in square footage was

deemed an impermissible amendment. AHCA has promulgated Rule

59C-1.010(2)(b), which prohibits application amendments once AHCA

deems an application complete. In light of the decision in Manor

Care , FCA’s offers of proof that the ACLF and therapy spaces were

not approved, or that it could build over 38,000 square feet

rather than 19,352 square feet for approximately $2 million

dollars are impermissible amendments to the FCA application. The

first floor was integral to the proposal FCA submitted to AHCA,

as was the $85 per square foot construction cost. Evidence at

final hearing of changes such as those suggested by FCA

undermines the ability of AHCA to take any meaningful preliminary

agency action and are impermissible.

FCA’s Motion For Summary Recommended Order Dismissing Mount Sinai

Medical Center of Greater Miami, Inc.

On January 5, 1996, FCA filed a Motion For Summary

Recommended Order to dismiss the application of Mount Sinai,

based on Mount Sinai’s failure to include a computer grant

application on schedule 2 as a pending capital project. Mount

Sinai refused to waive the time for response and argued,

subsequent to the favorable ruling on Mount Sinai’s Motion to

Dismiss FCA, that the granting of Mount Sinai’s Motion To Dismiss

FCA precluded consideration of FCA’s motion. On January 11,

1996, FCA filed as a supplemental exhibit to its motion. Mount

Sinai filed a response in opposition to the Motion and MJH filed

a request to participate in arguments in support of FCA’s Motion,

both on January 11, 1996. On January 12, 1996, FCA filed a

supplemental memorandum of law on the Motion and, on January 16,

1996, a notice of hearing. Following the hearing, a ruling on the

Motion was reserved for determination in this Recommended Order.

Mount Sinai’s Motion For Attorneys Fees

On May 20, 1996, Mount Sinai filed a Motion For Attorneys’

Fees And Costs from MJH, alleging that MJH’s petition for an

administrative hearing was frivolous, and filed to harass, delay,

and increase the costs to Mount Sinai. Mount Sinai also filed a

Memorandum of Law in Support of Proposed Recommended Order and

Motion For Attorneys’ Fees.

MJH filed a Response, on June 3, 1996, arguing that Mount

Sinai’s Motion For Attorneys’ Fees, and Memorandum are vehicles

to bolster its arguments in support of the CON application and

comes too late after the petition, pre-hearing stipulation, and

conclusion of the formal hearing.

On June 5, 1996, Mount Sinai filed a reply to MJH’s response

to correct what it termed a “gross mischaracterization” of the

testimony of one witness, with attached excerpts from the

transcript. For the reasons stated in Mercedes Lighting v.

Department of General Services , 560 So.2d 272 (Fla. 1 st DCA

1990), the Motion For Attorneys’ Fees is denied.

Brookwood’s Motion To Reopen The Record

At the same time that proposed recommended orders were

filed, Brookwood filed a Motion To Reopen The Record, Submit

Evidence of Misstatement of Fact, And Supplement The Record To

Reflect The True Facts. In the Motion, Brookwood quoted the

January 16, 1996 testimony (from page 942 of the formal hearing

transcript) of Mount Sinai’s President/Chief Executive Officer

(“CEO”) stating that Mount Sinai was having discussions, but had

no agreement to establish a relationship with St. Francis Barry

Nursing Home (St. Francis). Brookwood also asserted that, on

November 6, 1996 (which must have been intended to be 1995),

Mount Sinai’s President/CEO signed a change of ownership

licensure application to allow Mount Sinai to acquire an

ownership interest in St. Francis. The appendix to the motion

shows the licensure application dated November 6, 1995, and a

January 1, 1996 license changing the name of the nursing home to

Mount Sinai-St. Francis Nursing and Rehabilitation Center.

Mount Sinai’s response to Brookwood’s Motion To Reopen The

Record, filed on May 30, 1996, included pages 941-945 of the

formal hearing transcript, in which the witness testified about

discussions with St. Francis, and described the nursing home. In

addition, Mount Sinai’s Vice President for Patient Services also

testified, on cross examination, about on-going negotiations

between Mount Sinai and St. Francis to jointly operate the St.

Francis nursing home. (Transcript, p. 1588-1590). The

negotiations were also the subject of deposition cross-

examination of Mount Sinai’s Senior Vice President and Chief

Financial Officer. ( See , Mount Sinai exhibit 15, p. 51-59).

Mount Sinai also attached to its response the affidavit of Mount

Sinai’s general counsel asserting that discussions between Mount

Sinai and St. Francis began in June 1995; that the November 1,

1995 notice to AHCA of an intended partnership agreement was

filed 60 days in advance of the proposed ownership and name

changes as required by rule; that AHCA was notified on December

11, 1995 that the proposed partnership would not be formed; and

that Mount Sinai’s Board, on February 8, 1996, approved the

acquisition of an interest in the corporation which owns St.

Francis. Mount Sinai also cited portions of the final hearing

transcript in which arguments were made over the admissibility of

MJH’s Exhibit 51, correspondence and documents from AHCA

licensure files related to Mount Sinai’s proposed acquisition of

an ownership interest in St. Francis as of January 1, 1996, but

without any document to confirm that the changes had actually

occurred, as of the date of the final hearing.

Brookwood’s reply of June 3, 1996, notes that Mount Sinai’s

general counsel’s affidavit does not deny that there was an

agreement prior to February 9, 1996, just that the agreement was

finalized on that date, following Mount Sinai’s Board approval on

February 8. Brookwood also relies on the fact that a license

reflecting the changes that were only proposed in MJH’s Exhibit

51, was issued (apparently, in March 1996) with a retroactive

effective date of January 1, 1996. The license, according to

Brookwood, properly reflects the relationship of Mount Sinai and

St. Francis as of that date of and during the final hearing.

On June 5, 1996, MJH filed a Response to Brookwood’s Motion

To Reopen The Record and to Mount Sinai’s Response, and a Request

For Official Recognition of certain documents, pursuant to Rule

60Q-2.020, Florida Administrative Code and Section 120.61,

Florida Statutes .

On June 10, 1996, Mount Sinai filed a response to MJH’s

response, complaining that while MJH’s response is timely, its

request for official recognition is untimely, cumulative, and

includes inadmissible matters occurring subsequent to the

conclusion of the hearing.

The relationship between Mount Sinai and St. Francis havin g

been the subject of testimony at the final hearing, the Motion To

Reopen The Record and Request For Official Recognition are

denied.

FINDINGS OF FACTS

1. The Agency For Health Care Administration (“AHCA”) is

the state agency responsible for the administration of the

certificate of need (CON) program in Florida. AHCA published in

Volume 20, Number 41, of the Florida Administrative Weekly, on

October 14, 1994, a need for an additional 70 community nursing

home beds in AHCA District 1, Subdistrict 1, for Dade County. A

numeric need for 60 beds remains after the issuance of a CON for

10 beds to Miami Beach Healthcare Group, Ltd. d/b/a Miami Heart

Institute.

2. Brookwood-Extended Care Center of Homestead, d/b/a

Brookwood Gardens Convalescent Center (Brookwood), Mount Sinai

Medical Center of Greater Miami, Inc. d/b/a Mount Sinai Medical

Center (Mount Sinai) and Florida Convalescent Associates d/b/a

Palm Garden of North Miami Beach (FCA), among others, applied for

CONs in this batching cycle. Miami Jewish Home And Hospital For

The Aged, Inc., (MJH) opposes the issuance of a CON to Mount

Sinai.

3. In a joint prehearing stipulation, the parties agreed

that the CON applications were timely submitted, with complete

and admissible audited financial statements. In addition, all

applicants met the newspaper publication and notice requirements.

The parties agreed that CON review criteria pertaining to special

equipment not available in adjoining area, in subsection

408.035(1)(f), and to geographically underserved areas, in Rule

59C-1.036(2)(g), are not applicable to this case.

Brookwood

4. Brookwood is a 120-bed nursing home with a superior

license, which will increase to 180 beds if its CON application

number 7984 is approved. At hearing, Brookwood withdrew its

application for approval of a partial CON for 30 additional beds.

Brookwood is located in Homestead, in southern Dade County.

Currently, Brookwood has 110 occupied beds, including 7 of its 12

Medicare certified beds. Brookwood informally serves adult day

care clients, accommodates residents with Alzheimers’ and related

dementia (ARD) through the end stages, and currently provides

hospice services to 4 patients despite the absence of a formal

hospice agreement. Brookwood also has and can provide subacute

services with portable equipment and with some staff retraining.

Brookwood can provide, but has not ever provided, services to

persons who are HIV positive.

5. Brookwood Investments, Ltd. secures CONs, then develops

nursing homes before transferring ownership to other Brookwood-

related companies. Brookwood Investments manages the five

Brookwood-related company nursing homes in Florida, one each in

Walton, Jackson, Washington, and two in Dade County. All of

nursing homes hold superior licenses.

6. Brookwood was constructed in 1986-1987 on approximately

a 3 plus acre site. In 1992, Brookwood was one of 10 Dade County

nursing homes, or approximately 1500 nursing home beds, severely

damaged by Hurricane Andrew. Brookwood remained structurally

sound, was repaired and reoccupied in March 1994. The cost of

rebuilding was reimbursed by Brookwood’s insurer in May 1994.

Brookwood’s employees were paid while nursing home operations

were interrupted. The employees retrieved and returned

resident’s belongings, participated in training programs, and

assisted in the clean-up and restoration of the facility.

7. When ordered to evacuate for Hurricane Andrew,

Brookwood’s administrator was unable to implement the transfer

agreements with various area hospitals, which had already taken

residents from other nursing homes. Most residents were

transferred to a shelter in a school, while more critical care

patients were transferred to a senior citizens center. As a

result of Hurricane Andrew, nursing homes no longer use disaster

transfer agreements with hospitals. More recently, during

Hurricane Erin, Brookwood transferred all of its residents to the

other Brookwood-related company nursing home in Dade County,

Waterford, which has 180 beds in Hialeah. Activity rooms at

Waterford were set up like dormitories to accommodate the

additional residents and staff.

8. Brookwood proposes to construct approximately 21,000

square feet for the additional 60 beds at a total project cost of

$1,983,600. Its CON would be conditioned on adding beds at the

existing site, serving a minimum of 90 percent Medicaid in the

addition and 2 percent Medicare in the facility, establishing an

8-bed area for ARD residents, and establishing a subacute care

program. The only other nursing home in the Homestead area is

Homestead Manor Nursing Home, which has 54 beds at 93 percent

occupancy.

9. Brookwood is located on a dead-end street, within three

miles of a hospital and two miles of a Florida Turnpike exit. It

is in the Villages of Homestead, a 300 acre planned unit

development. The same Brookwood entity which owns the 3 acre

nursing home site also owns an adjacent 7 acres, zoned for the

development of a retirement community offering various levels in

a continuum of care. The four phases of the development include

phase one - the existing 120-bed nursing home, phase two - the

60-bed expansion proposed in Brookwood’s CON application, phase

three - an $8 million residential community for 100 elderly

residents needing medical services, and phase four - a $4 million

independent living facility for 100 elderly residents in need of

medical monitoring. Brookwood did not list the projects in

phases three and four or any routine capital expenditures as

capital projects in schedule 2 of the CON application. The

managing general partner testified that phases three and four

will not be developed by the applicant, but by another Brookwood-

related company. Having been rebuilt and refurbished in 1994,

Brookwood has largely new equipment which is under warranty and,

therefore, included no allowance for routine capital equipment

expenditures. Brookwood also filed a CON application six months

after the application at issue in this proceeding. In that

application, Brookwood included $20,000 as a contingency for

routine capital expenditures.

10. On schedule 1 of Brookwood’s CON application,

$1,595,000 in construction costs are listed. Other estimated

costs are $1200 for a site survey and soil investigation report,

$2400 for site preparation, $3,000 for water, sewer and other

utility systems, and $3,000 for landscaping. There are no

separately listed costs for roads and walks, although the plans

include a new road connecting the current entrance to a new 40

space parking lot. Brookwood presented evidence that the cost of

roads and walks is included in the construction costs and that

the other four items, although separately listed, are also

included. Construction costs also include a 3 percent

contingency. Brookwood also projected an expenditure of $2,000 a

bed or $120,000 in movable equipment.

11. There was a construction cost overrun of approximately

20 percent during initial construction of Brookwood in the mid-

1980’s. Another company initially secured the nursing home CON,

then transferred that CON for 360 beds to Brookwood Investments,

which resulted in the development of both Brookwood and

Waterford.

12. Prior to Hurricane Andrew, Brookwood was virtually 100

percent occupied in the 120 beds. After Brookwood reopened, 42

of its previous residents returned. Brookwood projected 95

percent occupancy for the fourth quarter of the first year, and

98 percent occupancy in the fourth quarter of the second year of

operation with 180 beds. In its subsequent application,

Brookwood reduced its projection by 2 percent in the first year

and 3 percent in the second year, based on its experience

subsequent to Hurricane Andrew. Greater than projected Medicare

use has caused more frequent movement of patients in and out of

the facility, resulting in logistical obstacles to having beds

continuously filled, and reduced occupancy rates. In addition,

Brookwood holds beds for the return of hospitalized Medicare

patients. Brookwood also projected 95 percent Medicaid, 2.5

percent private pay, and 2.5 percent Medicare in the facility in

this batching cycle. In the CON application filed six months

later, however, Brookwood projected 80.37 percent Medicaid, 18.9

percent Medicare, and 1.5 percent private pay, which is

consistent with the trend after the hurricane.

13. Brookwood’s staffing plan does not show staff for

housekeeping and laundry services. At the time the CON

application was filed, housekeeping and laundry services were

provided by an independent contractor, whose contract was

terminated subsequently. In the next batching cycle application,

Brookwood included positions for housekeeping, laundry and

approximately $80,000 for an ARD unit director and an ARD

activities coordinator. Brookwood also failed, in this

application, to include a position for an assistant director of

nursing, which is required when its size expands from 120 to 180

beds.

14. Brookwood’s initial construction was financed with long

term debt at an interest rate of 13.65 percent. After

refinancing in 1994, the interest rate was reduced to 8.5

percent, reducing payments by approximately $350,000 a year. The

property costs, however, continue to exceed the Medicaid property

reimbursement ceiling by $6 a Medicaid patient day or, with

approximately 40,000 Medicaid days a year, a total of $240,000 -

250,000 a year.

15. Brookwood plans to construct single rooms of 150 square

feet, as compared to the state requirement of 80 square feet, and

double rooms of 235 square feet, as compared to the state

requirement of 160 square feet. AHCA’s architect criticized

Brookwood’s plans for having the toilet area door opening into

bedroom space, but AHCA has approved essentially the same design

which is currently under construction at a Brookwood-related

company facility in Marianna, Florida.

MOUNT SINAI

16. Mount Sinai is a 707-bed tertiary acute care hospital

in Miami Beach, located on a 55-acre campus. It has a hospice

program, an accredited 60-bed comprehensive medical

rehabilitation unit, an accredited outpatient rehabilitation

department, a 50-bed inpatient geriatric psychiatric unit, and

the Wien Center For Alzheimers’ And Memory Disorders. In a joint

venture with MJH, Mount Sinai also operates a home health agency.

Mount Sinai is one of six teaching hospitals designated by

Florida Statutes, affiliated with the University of Miami Medical

School, and accredited by the Joint Commission on Accreditation

of Healthcare Organizations (JCAHO) and the Accreditation Council

for Graduate Medical Education. Over 150 teaching fellows are in

training in over 15 separate disciplines at Mount Sinai. Mount

Sinai is a disproportionate share provider of Medicaid services,

providing approximately 5 percent of total patient days to

Medicaid, second in Dade County, only to Jackson Memorial

Hospital.

17. Mount Sinai is the applicant for a CON to establish a

60-bed nursing home of approximately 40,000 square feet in Miami

Beach, for an estimated total project cost of $5.8 million. The

nursing home will be constructed on a site on the western edge of

the 55 acre medical campus on Biscayne Bay at the Julia Tuttle

Causeway, which is one of five routes connecting Miami to Miami

Beach. The proposed nursing home site is currently a parking

lot. Mount Sinai’s CON would be conditioned on the provision of

65 percent of total patient days to Medicaid, and the

establishment of a subacute program, a 12-bed geriatric

assessment and dementia treatment unit, a dementia specific adult

day care program, respite care, and a training and research

center. Subacute care, including rehabilitation programs will be

conducted in 48 beds. The adult day care will operate 7 days a

week for 14 hours a day.

18. At the time of hearing, approximately 530 to 540 of the

hospital’s 707 beds were occupied. The average annual occupancy

in 1994 was 65 percent in all licensed beds, and over 90 percent

in the 50-bed geriatric psychiatry unit, the 60-bed

rehabilitation unit, and the intensive care unit. Mount Sinai

considered conversion of existing beds to nursing home beds, but

rejected that alternative. There was, according to Mount Sinai’s

President, no area to establish a 60-bed distinct teaching

nursing home with an appropriate environment for long term

patients.

19. Mount Sinai will use the hospital’s existing kitchen

and laundry services, necessitating transportation of food and

linen to and from the hospital by truck. It will also use

existing administrative staff and management systems. The

existing case management methodology and multidisciplinary plan

of care, called “Critical Pathways”, will be extended to

establish standards of care, and to provide research samples in

areas related to long term care.

20. Mount Sinai proposes to use the nursing home and its

existing teaching staff to train doctors, nurses, social workers,

and other health care professionals, to care for patients in non-

acute care settings. Mount Sinai’s proposal will enhance the

placement and continuity of care for patients discharged from its

hospital to its nursing home, particularly those patients leaving

with higher acuity levels, lower reimbursement sources, and more

medically complex illnesses, such as those with AIDS or

ventilator-dependence. Mount Sinai applied for a $7 million

grant from the Department of Defense for a computer system. At

the time the CON application was filed, the grant application had

been denied. Mount Sinai’s administrator testified that Mount

Sinai intended to reapply for a grant of $300,000. FCA and MJH

argued that the grant application should have been disclosed on

schedule 2 of the Mount Sinai CON application.

21. Initially, the proposed nursing home location was

closer to the energy center on the Mount Sinai campus. In the

CON application narrative, the energy center is described as the

nursing home’s source of chilled water for the air conditioner

system, hot water, medical gases, and emergency generators. At

the time the application was filed, the plan was to build the

nursing home at a more remote location on the Mount Sinai campus.

MJH’s expert testified that the increased cost for connecting

over a greater distance is $108,000. Mount Sinai plans to use a

package chiller for the air conditioner, self-contained medical

gases, bottled tank oxygen for 48 rooms (excluding the dementia

unit), and an emergency generator, which can be covered in

$109.00 per square foot construction cost. MJH’s expert’s

conclusion that an additional $345,000 will be needed to

construct 1000 square feet to enclose the additional equipment is

inconsistent with the projected construction costs, which MJH

criticized as extravagant. The difference in the narrative and

the actual plan for the energy source from one connected to the

existing energy center to a separate power source at the nursing

home was challenged as an impermissible amendment to Mount

Sinai’s application.

22. MJH contends that the schedule 1 estimated project

costs, omit approximately $6,000 for traffic studies, $412,800

for site preparation cost, and $140,000 for lighting and site

furnishings. MJH also asserted that costs were understated for

soil investigation, utility systems, and landscaping. Mount

Sinai has a master campus traffic study, which includes the

nursing home site. MJH estimated site preparation costs

erroneously assuming the entire site will be filled. The

construction cost includes sufficient dollars to cover site

preparation costs, utility systems, and lighting.

23. Mount Sinai’s design is described, in its application,

as more akin to a hotel environment. Brookwood and MJH described

it as lavish and unnecessarily expensive. The rooms are designed

to enhance patient privacy by using an entertainment console as a

room divider in semi-private rooms. The arrangement requires two

television sets in each room. Residents also have separate

bathroom doors, from each side of the room, into a shared

bathroom.

24. Mount Sinai has a master campus plan to guide

development over the next fifteen years. Among the items

included in the plan are a 100,000 square foot staff office

building, a conference center, and a comprehensive rehabilitation

center. According to Mount Sinai’s administrator for finance,

estimates of future project costs for these master plan items

have not been made, nor any expense items associated with them

included in capital budgets, nor has the Board approved the

projects. The projects are not included on schedule 2 of Mount

Sinai’s CON application.

25. Despite orders to evacuate for Hurricane Andrew, Mount

Sinai was able to transfer approximately 10 of 450 to 500

patients to other hospitals. Mount Sinai’s transportation plan

was inadequate because no emergency vehicles were available. In

addition, Mount Sinai was unable to locate facilities providing

comparable levels of care, particularly for critically ill

patients. Mount Sinai commits to completely evacuate the nursing

home in the event of an evacuation order, and has a transfer

agreement with a 150-bed nursing home, St. Francis. Mount Sinai

has acquired 20 passenger vans to use for the evacuation. The

Mount Sinai hospital buildings are 11 feet above sea level, the

highest point on Miami Beach, and have shutters over windows in

all patient areas. Its location is the only one on Miami Beach

projected to withstand a Category 5 Hurricane. The nursing home,

at 5.5 feet above sea level, with an acre of fill to raise the

site 3 feet will have a floor level of about 9 feet.

26. At the final hearing, hurricane preparedness and

evacuation experts opposed the construction of any medical

facilities in high hazard coastal locations and on barrier

islands. Coastal high hazard areas are those which have to be

evacuated for category one hurricane. There is, however, no

legal prohibition to the development of medical facilities on

barrier islands.

MIAMI JEWISH HOME AND HOSPITAL (MJH)

27. MJH is a 462-bed nursing home, which includes an

outpatient clinic, a 32-bed specialty acute care geriatric

hospital, a 68-bed subacute unit, 120-bed ARD unit (with 40 of

those for late stage ARD patients) in three separate units, in

which patients are grouped according to their functional

cognitive levels. MJH also operates an 120-bed assisted living

facility, and two adult day care programs on campus and two off

campus. MJH is located approximately 7 to 8 miles, or a 15 to 20

minute drive from Mount Sinai. The occupancy of the nursing home

is 95 percent, with a waiting list.

28. The hospital, subacute unit, and dementia programs at

MJH are JCAHO-accredited. MJH holds a superior license from the

state. At MJH, training programs include two week clinical

rotation for medical students in geriatrics, elective rotations

for post graduates in internal medicine and family practice, two

year fellowships for geriatrics specialists, including geriatric

psychiatry. In addition to medical students and physicians, MJH

also has training programs for psychologists, nurses, physicians

assistants, physical therapists, and nursing home administrators.

The medical fellowship is accredited by the American Council of

Graduate Medical Education. Participating institutions include

the University of Florida, University of Miami, Barry University,

Florida International University, Columbia University School of

Social Work, Yeshiva University, Mercy Hospital School of

Nursing, Lindsey Hopkins Vocational School, and two Miami high

schools.

29. MJH also operates the Gelvan and Fischer Adult Daycare

Centers on the campus of MJH, under a single license with a

capacity of 70 and an average daily census of 45 to 50. Fischer

is dementia specific and averages 12 participants a day.

Gumenick Alzheimer’s Center, in North Miami Beach, has a licensed

capacity of 40, with an average daily census of 27 to 30

participants. The Legion Park has a capacity of 40 and an

average daily census of 32. One-half of the referrals to

Fischer, one-fourth of the referrals to Gumenick, and one-third

of the referrals to the Galvin Center come from the Wien Center

at Mount Sinai.

30. Approximately one-half of the $210,000 budget for

Fischer is provided by charitable contributions from a group

known as Alzheimer’s Care Notables. Charges in the Gumenick

Center are $35-40 a day, although costs are $52 a day for each

participantansportation is provided to and from adult day

care for approximately 100 participants a day, consistent with

state guidelines for dementia sufferers who must not be on a bus

more than 45 minutes. The center transports 50 percent of

Gumenick and 75 percent of Fischer participants. Gumenick

operates two buses on two routes, with drivers trained as

geriatric assistants, accompanied by a nursing assistant. The

annual operating cost of transportation is estimated at $50,000

per vehicle per year. The Galvin Center is predominately Jewish,

serving primarily patients from Miami Beach. Fischer is

approximately 20 percent Jewish. Gumenick draws a variety of

ethnic participants from older parts of Miami. MJH operates an

AHCA-approved and administered program called “Channelling”, a

community-based alternative to nursing homes, serving from 1000

to 1300 clients funded through a Medicaid waiver program.

31. The Stein Gerontological Institute at MJH focuses on

research on physical design to facilitate the functioning of

older persons in apartments, housing developments, and cars. The

Stein Institute and the University of Florida School of Aging,

through a collaborative arrangement to study human engineering,

held a world conference on aging and technology, in November

1994. Other areas of research includes geriatric patient

nutrition, overuse of drugs, and the effects of exercise.

Subsection 408.035(1)(a) - need in relation

to district and state health plans

32. The District 11 CON Allocation Factors Report lists

twenty-one preferences for consideration in determining if an

applicant should be issued a CON for nursing home beds. The

applicable state health plan is the 1989 Florida State Health

Plan which lists twelve preferences applicable to nursing home

CONs, some of which overlap those in the local health plan and

the statutory review criteria.

District 11, preference 1 - projects which exceed average

district Medicaid percentage; see, also subsection 408.035(1)(n),

Florida Statutes; and state health plan preference 2 - service to

Medicaid in proportion to subdistrict average, except in multi-

level care systems

33. The Dade County subdistrict average for Medicaid was

71.4 percent from January to June 1994. Brookwood proposed 90

percent Medicaid service in the additional beds. Currently,

Brookwood has a condition to provide 41 percent Medicaid, which

is significantly lower than Brookwood’s actual experience of 95

percent. Mount Sinai proposes to serve 65 percent Medicaid in

its nursing home. Mount Sinai is a disproportionate share

Medicaid provider, second only in Dade County to Jackson Memorial

Hospital, and is a multilevel provider. Consequently, Brookwood

and Mount Sinai meet the statutory and state health plan criteria

for service to Medicaid patients and residents.

34. With regard to district preference one, however, the 65

percent proposed by Mount Sinai does not meet the subdistrict

average of 71.4 percent. The 90 percent Medicaid proposed by

Brookwood meets the preference.

District 11, preference 2 - service to mentally ill under OBRA -

87; and state preference 3 - mentally ill, and Alzheimer’s

residents

35. Brookwood has psychiatric services available by

contract and will establish an 8-bed ARD unit. Mount Sinai will

establish a 12-bed unit and an adult day care center for 30 ARD

patients, and currently operates a 50-bed inpatient geriatric

psychiatric unit and the Wien Center for Alzheimer’s Disease and

Memory Disorders, an outpatient diagnostic and research facility

on the Mount Sinai campus. The center also provides counseling

and referral services for caregivers. Mount Sinai meets the

preference by having established, extensive resources for the

care of mentally ill and ARD residents.

District 11, preference 3 - service to mentally retarded

36. Consistent with federal requirements, neither applicant

will treat persons with only mental retardation as a diagnosis.

The preference is inapplicable.

District 11, preference 4 - to meet unmet needs for special

services, e.g. ventilator, AIDS, pediatric patients; preference 5

- HIV positive patient; and state health plan preference 3 -AIDS

residents

37. Brookwood has staff capable and trained to follow

appropriate protocols to care for ventilator and HIV positive

patients, but has never served an HIV positive patient.

Brookwood also currently has no ventilator patients, and its

staff will have to be retrained to treat ventilator patients.

Portable ventilators can be used at Brookwood.

38. Mount Sinai can serve ventilator, and HIVﰂ

patients. Mount Sinai operates an inpatient AIDS unit and is

equipped with forward and reverse isolation significantly more

capable of serving medically complex patients, including AIDS

patients, than Brookwood.

District 11, preference 6 - areas of geographic need based on

population 75 plus and occupancy rates; preference 9 -additional

beds at facilities with an existing average occupancy rate of 90

percent of higher, and state plan preference 1 locations in

subdistricts exceeding 90 percent

39. Prior to Hurricane Andrew, Brookwood exceeded 98

percent occupancy, but has not reached previous occupancy levels

after reopening. Brookwood’s occupancy rate was 83 percent at a

time when Miami Beach nursing homes exceeded 95 percent

occupancy. Mount Sinai meets the preferences.

40. Occupancy rates in the Homestead area are 95 percent at

Homestead Manor and 77 percent at Brookwood, for a Homestead area

average of 89.4 percent. Four nursing homes on Miami Beach

averaged occupancies of 95 percent in 1944-1995. The

concentration of persons over 75 on Miami Beach is more than

three times that of Dade County as a whole and more than twice

that of the State. Brookwood presented evidence of a lower bed

to population ratio in south Dade County as compared to all of

Dade County. By comparison, however, Homestead has a declining

population and a lower concentration of persons over 75. The

preferences, with emphasis on occupancy rates and the

concentration of the 75 and older population, are met by Mount

Sinai.

District 11, preference 7 - sharing services and resources with

other facilities

41. The Brookwood-related facilities share a centralized

purchasing and management company. Mount Sinai would also

benefit from centralized resources and purchasing power. In

addition, therapeutic program linkages are enhanced by locating a

nursing home on the medical campus, including the inter-

generational therapies for the nursing home and a child care

center. Due to its size and extensive resources, Mount Sinai has

more services to share with a nursing home. Mount Sinai prepares

and delivers all of the meals to South Shore Hospital, and will

also provide meals and linens to the nursing home. See , also ,

subsection 408.035(1)(e).

District 11, preference 8 - indigent care

42. The parties agree that indigent nursing home residents

usually qualify for Medicaid. Brookwood has historically served

large proportions of Medicaid patients and, correspondingly,

virtually no indigent care. Mount Sinai proposes to provide .5

percent indigent care in its nursing home. The preference does

not distinguish between the applicants.

District 11, preference 10 - nursing homes of at least 120 beds

in Dade County

43. Brookwood’s application is consistent with the

preference for a minimum of 120 beds in Dade County nursing

homes, and Mount Sinai’s is not consistent with the preference.

District 11, preference 11 - comprehensive scope of five or more

services in addition to basic skilled nursing care; and state

preference 6 - innovative therapeutic programs

44. Brookwood proposes traditional nursing home services,

while Mount Sinai proposes a comprehensive range of services

which are available due to its co-location and relationship

within a medical teaching complex and a child care center.

District 11, preference 12 - facilities which exceed federal

safety requirements, state nursing home rules and JCAHO;

preference 13 - superior ratings; and state preference 8 - for a

history of superior programs in existing facilities; See, also,

subsection 408.035(1)(c) - quality of care

45. Brookwood has held a superior license since 1992, when

first eligible under its current management. Mount Sinai is

accredited by the JCAHO. Both applicants meet the preference.

District 11, preference 14 - conversion of under utilized beds to

nursing home beds

46. The preference is not applicable to proposals to

construct either a freestanding nursing home or an addition to a

nursing home.

District 11, preference 15 - cost-effective design or additions;

subsection 408.035(1)(m) - less costly more effective

construction; (2)(c)- alternatives to new construction.

47. Brookwood’s design is cost-effective by adding 60 beds

and a third courtyard, using the same kitchen, laundry, and

administrative areas. Brookwood’s semi-private rooms have half-

baths, necessitating the use of common showers and tubs for all

residents except for those in the four private rooms.

Brookwood’s total cost per bed is $26,000. The mean per bed

nursing home cost per bed in Florida is $32,400, as compared to

the Medicaid ceiling of $36,000 per bed. The total project cost

is approximately $2 million for the additional 21,000 square

feet.

48. Mount Sinai is larger than necessary to accommodate

services for a 60-bed nursing home, but the evidence demonstrates

that the size is justified for the use of the facility as a

teaching nursing home for training residents, fellows, nurses,

social workers, and other health care professionals. Mount

Sinai’s construction cost per bed is $97,500. The total project

cost is $5.8 million for approximately 40,000 square feet. MJH

notes that Mount Sinai’s wainscoting, marble window sills and

fireplaces are elaborate. The higher cost is also attributable

to classrooms and other student spaces.

District 11, preference 16 - one full-time direct staff person

speaking the language expected of every 25 residents; state

preferences 9 and 10 - for staffing exceeding minimums,

particularly nurses, and multi-disciplinary staffing

49. Both Brookwood and Mount Sinai meet the preference for

having bilingual staff to care for residents. Both applicants

propose staffing levels above the minimum required in licensure

rules. Mount Sinai’s nursing staff exceeds that of Brookwood.

In addition, Brookwood included in workpapers, but omitted from

its application a position for an assistant director of nursing,

which is required when a facility expands from 120 to 180 beds.

Mount Sinai also has health care specialists from a wider variety

of disciplines on staff as compared to the disciplines with which

Brookwood contracts.

District 11, preference 17 - outside recreational opportunities

and adequate visitor parking; state preference 5 - design and

special features to maximize resident comfort

50. Brookwood meets preference 17 by proposing to construct

a third entirely enclosed courtyard. Mount Sinai’s plans also

include an enclosed courtyard, other outdoor recreational areas,

and adequate parking. Both applicants meet preference 17 of the

district health plan.

51. Brookwood and Mount Sinai also meet state preference

five. Brookwood’s nursing home includes much larger rooms then

required by rule and vaulted ceiling corridors with clerestory

windows. Mount Sinai also has an enclosed courtyard and large

resident rooms, divided by entertainment consoles in semi-private

rooms to enhance privacy for the residents.

District 11, preference 18 - formalized patient transfer

mechanisms

52. Brookwood is already well-integrated into the health

care system, and Mount Sinai has the advantage of its proposed

location on the campus of a tertiary level teaching hospital.

Both applicants meet preference 18.

District 11, preference 19 - facilities located in Monroe County

53. The preference is not met by the applicants. Brookwood

does serve an average census of 15 Monroe County residents, but

is not located in Monroe County.

District 11, preference 20 - natural or other disaster evacuation

plans and agreements

54. Evacuation plans and arrangements made by Brookwood,

subsequent to Hurricane Andrew, were tested and successfully

executed during Hurricane Erin in 1995. All residents, necessary

staff, medications, charts, and linens were quickly and

efficiently transferred to and accommodated at the other Dade

County Brookwood facility, Waterford. Mount Sinai was unable to

evacuate more than 10 of 400 to 450 patients during Hurricane

Andrew, and was unable to evacuate during Hurricane Erin, due to

the absence of agreements with comparable providers and an

inadequate supply of emergency vehicles. Mount Sinai is revising

its evacuation plan for acute care patients, has entered into a

nursing home resident transfer agreement with St. Francis, and

has purchased 20 patient passenger vans, 14 of which are

wheelchair equipped. Mount Sinai failed to prove that it can

successfully evacuate its hospital, although the arrangement with

St. Francis and the acquisition of passenger vans support a

conclusion that it could evacuate a 60-bed nursing home. The

arrangement is comparable to that which exists between Brookwood

and Waterford. Based on its tract record, Brookwood better meets

the requirements of preference 20.

District 11, preference 21 - locations which are not on major

highways

55. Brookwood’s location at the end of a dead end street

within a planned unit development in Homestead is a preferable

nursing home setting to Mount Sinai’s location on the Julia

Tuttle Causeway in Miami Beach.

State preference 4 - continuum of care; see, also, subsection

408.035(1)(o) - continuum of care in multilevel system

56. Brookwood is the first phase of a planned continuing

care retirement community. The organizational structure, funding

sources, and timetables for the residential and independent

living developments have not been established. Brookwood

provides some informal adult day care, but included no plans for

a more formal program in its CON application. By contrast, Mount

Sinai is able to plan extensively for a continuum of care ranging

from acute care, comprehensive rehabilitation, subacute and

rehabilitation in the nursing home adult day care, respite to

outpatient care.

State preference 7 - charges not exceeding highest Medicaid per

diem in subdistrict

57. Brookwood and Mount Sinai meet the preference with

proposed charges not exceeding the highest Medicaid per diem rate

in the subdistrict (inflated forward to the proposed second year

of operation).

State preference 11 - residents rights and privacy, residents’

councils, quality assurance and discharge planning

58. Both applicants will ensure residents’ rights and

privacy, and will establish residents’ councils. They also have

appropriate quality assurance and discharge planning programs.

State preference 12 - lower administrative costs and higher

resident care costs than district average

59. Brookwood meets the preference for lower administrative

costs and higher resident care costs than the district average.

Mount Sinai’s resident care and administrative costs exceed the

district average.

60. In general, Brookwood meets the state and local health

plan criteria for Medicaid service, the size and location of the

facility, the ability to evacuate in case of natural disaster,

cost-effectiveness of the design, and costs. Mount Sinai meets

the preferences for Medicaid in a multilevel facility, for the

scope of services it can provide to residents with ARD, AIDS/HIV

positive, and ventilator-dependence, for the multidisciplinary

professional staff to provide those services, and for an

extensive continuum of care. In addition, the need for a nursing

home, as determined by occupancy levels and population 75 years

old and older, is greater on Miami Beach than in Homestead.

Subsection 408.035(1)(b) - like and existing facilities in the

district; (d) - alternatives; (g) need for research and

educational facilities; (2)(a) - patient access problems; (2)(b)

- efficient use of existing nursing homes

61. The parties agree that, fo r some residents, there are

no alternatives to nursing home care. In the Homestead area,

given the occupancy level at Homestead Manor, once Brookwood

reaches occupancy levels experienced prior to Hurricane Andrew,

the most appropriate response is the proposed 60-bed expansion of

Brookwood. That expansion will also allow Brookwood to meet the

needs for more specialized ARD and subacute care. Brookwood has

limited internship and training programs.

62. Mount Sinai contends that its proposal will meet the

need for a teaching nursing home and provide a facility for

medically complex residents who are currently difficult to place.

There are, however, no standards for teaching nursing home, no

requirements that any health care professional receive training

in a teaching nursing home, and no methodology for determining

the need for teaching nursing homes.

63. MJH asserts that its educational and research programs

offer an alternative to the Mount Sinai proposal, and that it

accommodates patient referrals from Mount Sinai. MJH’s Director

of Social Work and Admissions testified that the only patients

excluded because of their condition are ventilator patients. She

also testified that Medicare patients are always accepted, if

necessary by relocating an HMO or private pay patient from a

Medicare bed to the 32-bed hospital unit. MJH will not, however,

allow short-term Medicare residents to use the Medicare admission

as an avenue to circumvent the waiting list for long term care

beds. The age restriction for “elderly” has been lowered from 65

to 55. Persons diagnosed with Alzheimer’s also have to go on the

long term waiting list. The designated Alzheimers’ units are

frequently full.

64. MJH has a total of 68 Medicare certified beds, 18 of

which are also dually certified for Medicaid. MJH has a waiting

list for the 18 dually certified beds. Medicaid patients cannot

be accepted in the other 50 beds. MJH also uses the 32-bed

hospital for private pay patients waiting for long-term beds, but

has no Medicaid provider number for the acute care beds. MJH

admissions is generally restricted to residents of Dade, Broward,

and Palm Beach Counties, although that policy has recently been

relaxed. Occupancy rates in the 68 short term rehabilitation

beds at MJH have ranged from 95 to 100 percent, since 1993, with

the average daily census reaching up to 69 patients. Considering

appropriate diagnostic and gender groupings optimal occupancy in

short term beds is 85 percent.

65. The teaching programs at Mount Sinai are sig nificantly

different from those at MJH. Even if they were not, MJH is not a

viable alternative for the placement of patients because of the

limitations on its service to certain patients, including

ventilator-dependent, and those with AIDS/HIV positive, and its

high occupancy levels, particularly in ARD and other long term

care units. The occupancy rates at MJH and other Miami Beach

nursing homes pose a serious obstacle to access, particularly for

Medicaid residents.

Subsection 408.035(1)(h) - available personnel and other

resources; and (i) - financial feasibility

66 . Brookwood and Mount Sinai have the ability to recruit

and train staff to operate a nursing home. Brookwood has access

to sufficient funds for construction and start-up of the project

and is, therefore, financially feasible in the short term.

67. Brookwood is also financially feasible in the long

term, considering its debt restructuring, increasing Medicare and

declining Medicaid, and improved management. The economics of

scale from operating 180 beds rather than 120 would assist

Brookwood financially, except that the fill rate experience would

be slower than projected. Brookwood projected sufficient

staffing above state requirements to create a position for an

assistant director of nursing.

68. MJH’s expert agreed, on cross examination, that Mount

Sinai’s proposal is also financially feasible in the immediate or

short term. Because of its dependence on charitable

contributions and understated expenses, MJH’s expert opined that

Mount Sinai’s proposal is not financially feasible in the long

term. In determining the financial feasibility of projects at

not-for-profit health care facilities, which reasonably rely on

charitable contributions, it is reasonable to include

contributions in evaluating financial feasibility. Otherwise, a

CON would never be issued to a not-for-profit institution which

relies on contributions to compensate for operating deficits.

That result is contrary to all the preferences and statutory

criteria for disproportionate share and other Medicaid or

indigent care providers.

69. The Mount Sinai Foundation has received over $90

million in contributions over the past ten years, or an average

of $9 million a year. It is reasonable to expect grants and

charitable donations of $125,000 in the first year, and $300,000

in the second year, to make the nursing home financially

feasible.

70. MJH’s expert in health care finance, including

financial feasibility testified that a number of costs were

omitted from schedule 1. Land costs, he asserted, although an

asset of the hospital, represents an opportunity cost when

transferred to the nursing home. MJH’s expert, however, also

prepared a CON application for a nursing home site at a hospital

which omitted land costs. Cash flow statements are omitted

because, as of this batching cycle, they are not required by

AHCA.

71. Mount Sinai was also criticized because schedules 10

and 11 show physical, occupational and speech therapies, but not

revenues or expenses associated with therapies for medically

complex patients, such as intravenous, wound care, or ventilator

services. These expenses and revenues are properly omitted

because they will be billed directly.

72. MJH’s expert also testified that Mount Sinai should

have allocated a portion of the hospital’s fixed costs to the

nursing home. There is no requirement that fixed costs be

allocated to the nursing home. To the extent that any

incremental increases in dietary, laundry, and administrative

staff are attributable to the nursing home, those are included on

the schedules and taken into account in the pro forma. Mount

Sinai’s proposal is financially feasible in the long term.

Subsection 408.035(1)(j) - needs of HMOs

73. There is no evidence that either proposal is intended

to or will meet the needs of a health maintenance organization.

Subsection 408.035(1)(k) - needs of entities serving individuals

not residing in the district

74. The criterion is not at issue in this proceeding.

Subsection 408.035(1)(l) - Adverse impact on Miami Jewish Home

75 . There is no evidence of any adverse impact from the

approval of the Brookwood CON application. By contrast, MJH

projects an adverse impact from the approval of the Mount Sinai

CON. MJH expects to loose all of its referrals from Mount Sinai

and to lose charitable contributions as a result of the

competition from the 60-bed facility at Mount Sinai.

76. MJH runs a deficiency from operations ranging between

$7 million to $8 million a year, relying on philanthropic support

from the Greater Miami Jewish Federation and the United Way to

meet the deficits. The Medicaid reimbursement rate is $3 million

less than the actual cost for Medicaid care. Medicare, by

contrast, is a cost-reimbursed system. For the 1994 fiscal year,

77 of 125 MJH’s new Medicare admissions or 62 percent came from

Mount Sinai. MJH’s chief Financial Officer assumed a loss to

Mount Sinai of 100 percent of new referrals from Mount Sinai, 10

percent of MJH residents temporarily hospitalized at and

returning from Mount Sinai, and 5 percent of the private pay

market. Assuming that Medicaid patients replace from 60 to 100

percent of the Medicare patients lost to Mount Sinai, MJH

estimated increases in a $600,000 deficit to a deficit ranging

from $887,000 to $921,000. As compared to MJH’s total revenue

gains from public and other sources of $37 million to 45 million,

the adverse impact projected by MJH is mathematically less than

one percent, but it does represent an increase in net losses from

operations of 19 to 20 percent.

77. It is not reasonable to assume that the effect of a

Mount Sinai nursing home be disproportionately greater on MJH

than on any other current nursing home recipient of Mount Sinai

referrals. It is not reasonable, therefore, to assume that Mount

Sinai will never make referrals to MJH. Using a more reasonable

proportional impact analysis, MJH can reasonably expect a loss of

up to 26 Medicare referrals a year, and $90,000 in revenue.

Mount Sinai will not be competing with MJH for the same patients

when it moves patients from the acute care hospital into the

nursing home sooner than it would have made an outside referral,

or by providing services to ventilator, AIDS, and Medicaid

recipients who are not currently served due to the area’s high

occupancy rates.

78. MJH is also concerned about declining charitable

donations, although somewhat speculative and not quantified, the

concern is valid. There is no evidence from which to conclude

that the presence of a 60-bed nursing home at Mount Sinai will

make it any more difficult for MJH or any less difficult for

Mount Sinai to attract charitable contributions. MJH and Mount

Sinai have a history of cooperation, including having overlapping

Board members. They have both been successful at fundraising

even though they are receiving contributions from some of the

same sources.

79. On balance, Mount Sinai better meets the statutory

criteria for a CON than Brookwood, primarily because of the unmet

need which exists in the population 75 and older on Miami Beach.

CONCLUSIONS OF LAW

80. The Division of Administrative Hearings has

jurisdiction over the subject matter of and the parties to this

proceeding, pursuant to subsections 408.039(5) and 120.57(1),

Florida Statutes .

81. The applicants have the burden of proving entitlement

to a certificate of need. Boca Raton Artificial Kidney Center,

Inc. v. DHRS , 475 So.2d 260 (Fla. 1 st DCA 1985).

82. In its CON application FCA failed to include on

schedule 2, the capital costs for therapy spaces and ALF beds on

the first floor of its two story addition. The omission made it

impossible for AHCA to determine whether FCA has the ability to

fund the project as proposed. Central Florida Regional Hospital

v. DHRS , 13 FALR 35, DOAH Case No. 90-1526 (1990) and Manor Care,

Inc. of Sarasota v. DRHS , 558 So.2d 26 (Fla. 1 st DCA 1989).

83. The future development phases of the Brookwood

retirement community and the conceptual master campus development

plan for Mount Sinai are not capital projects which the

applicants have approved via authorization to execute within the

meaning of Rule 59C-1.002(8), Florida Administrative Code , and

were not required to be listed on schedule 2 of the CON

applications.

84. It was reasonable for Brookwood to rely on warranties

on new equipment rather than expect routine capital budget

expenditures on to speculate on unexpected expenditures to list

on schedule 2.

85. Mount Sinai was not required to list its Department of

Defense computer grant application on schedule 2. Applications

to receive grant funds are not “capital projects” for which a

capital expenditure has been approved within the meaning of Rule

59C-1.002(8), Florida Administrative Code . In addition, at the

time of the CON, the only information Mount Sinai could have

disclosed to AHCA was that it was planning to reapply for the

grant after having been denied previously, which is not required

by the rule.

86. The undisputed need for 60 nursing home beds is

confirmed by the fixed numeric need. No special circumstances to

exceed that number have been demonstrated.

87. On balance, the state and local health plan preferences

favor slightly the application of Mount Sinai, particularly those

preferences related to concentrations of elderly population and

occupancy rates. Subsection 408.035(1)(a).

88. An analysis of like and existing providers demonstrates

the need for Mount Sinai’s proposal. The extent of utilization

of Miami Beach nursing homes, the undisputed high demand for

subacute care, and waiting lists for Medicaid and Alzheimers care

are persuasive. Subsections 408.035(1)(b), (d), (n), (2)(b) and

(d).

89. In addition to meeting a demonstrated need, Mount

Sinai’s proposal offers the advantage of establishing a superior

research and a teaching facility in a multilevel setting offering

an expansive continuum of care. Subsection 408.035(1)(c), (g)

and (o).

90. Mount Sinai’s high cost are a matter of concern, but

given the space necessary for its teaching and research

activities, and its history of substantial fundraising, the

project can be accomplished and is financially feasible in the

immediate and long term. Subsections 408.035(1)(h), (i), (m),

(2)(a), and (c).

91. On balance, the application of Mount Sinai better meets

the statutory CON review criteria.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that the Agency For Health Care Administration

enter a Final Order denying the applications of FCA for CON 7980,

and of Brookwood for CON 7984, and issuing CON No. 7978 to Mount

Sinai to construct a 60-bed freestanding nursing home on its

medical campus, on condition that Mount Sinai establish a 12-bed

geriatric assessment and dementia treatment unit, a dementia-

specific adult day care program, respite care, and a training and

research center; and that it provide 65 percent of total annual

patient days t Medicaid recipients.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this

13th day of March, 1997.

___________________________________

ELEANOR M. HUNTER

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 13th day of March, 1997.

COPIES FURNISHED:

Mark Thomas, Esquire

Agency For Health Care Administration

Office of the General Counsel

2727 Mahan Drive

Tallahassee, Florida 32308

Theodore E. Mack, Esquire

Cobb, Cole and Bell

131 North Gadsden Street

Tallahassee, Florida 32301

Gerald B. Sternstein, Esquire

Frank P. Rainer, Esquire

Ruden, McClosky, Smith,

Schuster & Russell

Post Office Box 10888

Tallahassee, Florida 32302

R. Terry Rigsby, Esquire

Geoffrey Smith, Esquire

Blank, Rigsby & Meenan, P.A.

204 South Monroe Street

Tallahassee, Florida 32301

Paul H. Amundsen, Esquire

Rodolfo Nunez, Esquire

Richard Moore, Esquire

Amundsen and Moore

502 East Park Avenue

Tallahassee, Florida 32301

Sam Power, Agency Clerk

Agency For Health Care Administration

2727 Mahan Drive

Tallahassee, Florida 32308

Jerome W. Hoffman, General Counsel

Agency For Health Care Administration

2727 Mahan Drive

Tallahassee, Florida 32308

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15

days from the date of this recommended order. Any exceptions to

this recommended order should be filed with the agency that will

issue the final order in this case.