95-002649RX Bethesda Memorial Hospital, Inc. vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Thursday, August 17, 1995.

Summary: Acute care bed need methodology rule invalid for yielding irrational gross overestimate of need for added beds with average 50% occupancy statewide.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BETHESDA MEMORIAL HOSPITAL, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 95-2649RX

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent, )

and )

)

NME HOSPITAL, INC., d/b/a DELRAY )

COMMUNITY HOSPITAL, )

)

Intervenor. )

__________________________________)

FINAL ORDER

This case was consolidated with Division of Administrative Hearings Case

No. 95-0730 and heard by Hearing Officer Eleanor M. Hunter, on June 12-16, 1995,

in Tallahassee, Florida.

APPEARANCES

For Petitioner, Kenneth G. Hoffman, Attorney

Bethesda Memorial W. David Watkins, Attorney

Hospital, Inc.: Oertel, Hoffman, Fernandez & Cole, P.A.

Post Office Box 6507

2700 Blair Stone Road

Tallahassee, Florida 32314-6507

For Respondent, John Gilroy, Attorney

Agency For Health Agency for Health Care Administration

Care 2727 Mahan Drive

Administration: Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

For Intervenor, C. Gary Williams, Attorney

NME Hospitals, Michael J. Glazer, Attorney

Inc., d/b/a MacFarlane, Ausley, Ferguson & McMullen

Delray Community Post Office Box 391

Hospital: 227 South Calhoun Street

Tallahassee, Florida 32302

STATEMENT OF THE ISSUES

1. Whether Rule 59C-1.038, the acute care bed need rule, is an invalid

exercise of delegated legislative authority.

2. Whether this rule challenge should be dismissed as an untimely attack

on a published fixed need pool.

PRELIMINARY STATEMENT

The Agency For Health Care Administration ("AHCA") preliminarily approved

Certificate of Need ("CON") Application Number 7872 to allow NME Hospitals,

Inc., d/b/a Delray Community Hospital ("Delray") to add 24 acute care beds.

Delray is located in AHCA District 9, Subdistrict 5, for southern Palm Beach

County, as is Bethesda Memorial Hospital, Inc. ("Bethesda"). Bethesda is the

Petitioner in this challenge to the acute care bed need rule and in the case

challenging the preliminary approval of Delray's CON, Division of Administrative

Hearings ("DOAH") Case No. 95-0730. Bethesda filed a Motion To Consolidate the

two cases and Delray filed a Petition to Intervene in the rule challenge.

Bethesda's Motion To Consolidate and Delray's Petition to Intervene were

granted, after a hearing held by telephone conference on June 9, 1995. Ruling

was reserved on Delray's Motion To Dismiss Or, Alternatively Motion To Strike

Bethesda's Petition For Administrative Determination Of The Invalidity Of Agency

Rule, for disposition in this order. The Motion is denied for the reasons given

in conclusion of law 31.

Although the cases were consolidated for hearing, the parties stipulated

that the record for the rule challenge case would include only the testimony of

the witnesses and exhibits listed in this Order. Bethesda presented the

testimony of Phillip C. Rond, III, expert in health care planning and health

policy research. Bethesda's exhibit 1, the challenged rule, was received in

evidence and is attached as an exhibit to this order.

AHCA presented the testimony of Elizabeth Dudek, expert in health care

planning and certificate of need policy and procedure (found in Volume I of the

transcript of DOAH Case No. 95-0730); and Elfie Stamm, expert in health care

planning. AHCA's exhibit 1, the text of a 1987 amendment to the rule, was

received in evidence.

Delray presented the testimony of Daniel Sullivan, expert in health care

planning. There were no Delray exhibits submitted for the rule challenge.

After the final hearing, Delray filed a Motion to Extend Post-Hearing

Deadlines, to delay the filing of the transcript from July 10 to August 11, and

to delay the filing of the proposed recommended and final orders until August

21, 1995. The Motion was granted, in part, and denied, in part, resulting in

the filing of the transcript and proposed final orders in this case as

originally scheduled, but delaying the filing of proposed recommended orders in

DOAH Case No. 95-0730 until August 21, 1995.

FINDINGS OF FACT

1. In August 1994, the Agency for Health Care Administration ("AHCA")

published a numeric need of zero for additional acute care beds in AHCA District

9, Subdistrict 5, for southern Palm Beach County. Pursuant to Subsection

408.034(3), Florida Statutes, AHCA is the state agency responsible for

establishing, by rule, uniform need methodologies for health services and

facilities.

2. In September 1994, NME Hospitals, Inc. d/b/a Delray Community Hospital,

Inc. ("Delray") applied for a certificate of need ("CON") to add 24 acute care

beds for a total construction cost of $4,608,260. AHCA published its intent to

approve the application on January 20, 1995, in Volume 21, No. 3 of the Florida

Administrative Weekly.

3. By timely filing a petition, Bethesda Memorial Hospital, Inc.

("Bethesda") challenged AHCA's preliminary decision in DOAH Case No. 95-0730.

Bethesda is also located in AHCA District 9, Subdistrict 5. On May 24, 1995,

Bethesda also filed the petition in this case challenging Rule 59C-1.038,

Florida Administrative Code, the acute care bed need rule.

4. Pursuant to the acute care bed need rule, AHCA's August 1994 notice

published its finding that zero additional acute care beds will be needed in the

southern Palm Beach County subdistrict by July, 1999. The data, formulas, and

calculations used in arriving at the number zero were not published. AHCA and

Delray argue that the publication put persons on notice to inquire into the

population data, occupancy rates, or the calculations leading to the published

need number.

5. An AHCA rule bars a person from seeking, and AHCA from making, any

adjustments to the fixed need pool number if the person failed to notify AHCA of

errors within ten days of publication. Still another rule defines "fixed need

pool" as the " . . . numerical number, as published. . . ."

6. Bethesda is not contesting and, in fact, agrees that the fixed need

pool number as published, zero, is correct. Using AHCA's definition of the

fixed need pool, Bethesda's challenge is not barred because it failed to notify

AHCA of an error in the fixed need pool number within 10 days of publication.

7. Bethesda is challenging as irrational and invalid subsections (5), (6),

and (7) of the acute care bed need rule. Subsection (5) directs the local

health councils to determine subdistrict bed need consistent with the

methodology for determining district bed need. Under that provision, total

projected patient days of acute care needed in a district is calculated by

adding together the projected patient care days needed in medical/surgical,

intensive care, coronary care, obstetric, and pediatric beds. Each of these

separate bed need projections is computed, in general, by multiplying projected

population in the district for the appropriate age or gender group times a

factor which is the product of the statewide discharge rate and the average

length of stay for that particular type of care. After the total projected

acute care patient days for district residents is computed, the number is

adjusted to reflect historical patient flow patterns for acute care services,

for out-of-state residents served in the district, for residents of other

districts served in the district, and for residents of the district served

outside the district. The rule includes specific percentages to apply for each

patient flow group for each of the eleven districts. After the total number of

beds needed in the district is derived, that number is decreased by the number

of existing licensed or approved beds to get the number of additional acute care

beds needed in the district, if any.

8. Bethesda is challenging subsections (7)(a), (b), and (c) of the acute

care rule, which authorize adjustments to the calculations from subsections (5)

and (6) to achieve desired occupancy levels, based on historic utilization of

acute care beds in a district. Bethesda is also seeking a determination that

subsections 7(d) and (e) are invalid. Each of those subsections of the rule

refer to (5)(b), although AHCA's expert witness testified that they should refer

to (6)(b). Subsection (7)(d) requires at least 75 percent occupancy in all

hospitals in the district before new acute care beds normally are approved,

regardless of the net need projected by the formulas. Subsection (7)(e) allows

approvals under special circumstances if net need is projected by the formulas

and the applicant facility's occupancy rate equals or exceeds 75 percent.

Subsection (7)(e), the provision directly related to the Delray application, is

as follows:

(e) Approval Under Special Circumstances.

Regardless of the subdistrict's average

annual occupancy rate, need for additional

acute care beds at an existing hospital is

demonstrated if a net need for beds is shown

based on the formula described in paragraphs

(5)(b), (7)(a), (b), (c), and (8)(a), (b),

(c), and provided that the hospital's average

occupancy rate for all licensed acute care beds

is at or exceeds 75 percent. The determination

of the average occupancy rate shall be made

based on the average 12 months occupancy rate

made available by the local health council two

months prior to the beginning of the respective

acute care hospital batching cycle.

9. Phillip C. Rond, III, Ph.D., was the primary architect of the rule,

beginning in 1981. The rule was initially published in 1982, and adopted in

1983. Constants in the rule formulas, including use rates, average lengths of

stay, occupancy standards and patient flow patterns were taken from a 1979

survey of some state hospitals.

10. Because data used for the constants in the formulas was expected to

change, subsection (6) also provides, in pertinent part, that:

Periodic updating of the statewide discharge

rates, average lengths of stay and patient flow

factors will be done as data becomes available

through the institution of statewide utilization

reporting mechanisms.

11. Patient flow factors were updated in March 1984 to reflect a change in

the realignment of counties in Districts 5 and 8. No other constants have been

updated since the rule was adopted in June 1983.

12. More current data is available. The Hospital Cost Containment Board

("HCCB") began collecting statewide hospital inpatient discharge data in the

fourth quarter of 1987, which became available by the fall of 1988. AHCA now

collects the data.

13. Using the rule, the projected net need for acute care beds in 1999 in

District 9 is 1,442 additional beds. By contrast, with the factors updated by

Dr. Rond, the projected net need is a negative 723 or, in other words, District

9 has 723 more acute care beds than it will need in 1999. The updated formulas

show a need for a total of 3,676 beds in District 9, which already has 4,399

licensed or approved acute care beds.

14. Since 1983, hospital utilization has declined in both rates of

admissions or discharges, and in average lengths of stay. Although the

occupancy goals in the rule are 75 to 80 percent, depending on the type of

hospital service, the occupancy rate achieved by using the number of beds

projected by the rule methodology is 45 to 52 percent.

15. The statewide occupancy rate in acute beds is approximately 50 percent

in 49,215 licensed beds. The formulas in the rule show a statewide net need for

6,000 more beds in 1999, but updated constants in the same formulas result in a

total statewide need for approximately 36,000 acute care beds in 1999, or 13,000

fewer beds than currently exist.

16. Statewide utilization of acute care hospital beds declined from 1187.2

days per 1000 population in 1983 to 730.5 days per 1,000 in 1993, despite

increases in the percentage of the elderly population.

17. By 1987, AHCA's predecessor realized that the need methodology in the

rule was grossly overestimating need and inconsistent with its health planning

objectives. Subsection (7)(d) was added to the rule to avoid having a published

fixed need based on the outdated methodology in subsections (5), (6) and 7(a)-

(c). The occupancy data is also, as the 1987 amendment requires, that reported

for the most recent 12 months, available 2 months before the scheduled

application cycle.

18. In August 1994, AHCA published a numeric need of zero for District 9,

Subdistrict 5, rather than 1,442, the calculated net need predicted by the

formulas in the rule, because all subdistrict hospital occupancy rates did not

equal or exceed 75 percent.

19. Elfie Stamm of AHCA, who is responsible for the publication of fixed

need pools, confirmed that the 1987 amendment to the rule was an efficient and

cost-effective way to avoid publishing need where there was no actual need. She

confirmed Dr. Rond's conclusions that the formulas are no longer valid and

produce excessive need numbers, as in projecting a need for 6,000 or 7,000 more

acute care beds in the state. She also confirmed that none of the constants in

the formula have been updated as required by subsection 6. Ms. Stamm claims

that the information needed to update the formulas cannot be obtained easily

from any statewide utilization reporting mechanism. One problem, according to

Ms. Stamm, is the possibility of including patients in acute care beds with

comprehensive rehabilitation, psychiatric, or substance abuse problems, although

it is not lawful for acute care providers to place patients with these primary

diagnoses in licensed acute care beds and all data bases have some miscoding of

diagnoses. She also testified that some factors required in the formulas are

not included in HCCB data base. In addition, she testified that AHCA is in the

process of filing a notice to repeal the acute care bed need rule. The filing

of the notice of repeal, published in Volume 21, Florida Administrative Week,

pp. 4179-4180 (6/23/95) was confirmed by Bethesda's Request For Official

Recognition, which was filed on July 20, 1995, and is granted.

20. Ms. Stamm also noted that rules for other need-based health services

have facility-specific special circumstances provisions, which are not tied to

numerical need, otherwise the special circumstances are not really facility-

specific. Need rules make no sense, according to Ms. Stamm, without an

exception in the absence of a determination of need.

21. Subsection (7)(e) of the acute care rule requires a finding of numeric

need and a 75 percent occupancy rate at the applicant facility. Ms. Stamm's

records indicate that AHCA's predecessor adopted the facility-specific

provisions tied to net need at the same time it adopted the 75 percent average

district occupancy standard to overcome the problems with the net need formula.

AHCA asserts that the admittedly irrational need methodology when combined with

the 1987 amendment achieves a rational result. Because the need methodology

always over estimates numeric need, facilities exceeding 75 percent occupancy

have an opportunity to demonstrate special circumstances.

22. Daniel Sullivan, Delray's expert, also testified that problems exist

in extracting acute care bed from specialty bed utilization data, in hospitals

which have both. He also agreed with Ms. Stamm that the 1987 amendment corrects

the erroneous projections of the formula to give a rational outcome from the

rule as a whole when not all hospitals in a subdistrict equal or exceed 75

percent occupancy and when one hospital, over 75 percent occupancy, attempts to

establish a special circumstance, despite the fact that the need methodology

itself is always wrong in projecting numeric need.

23. Ms. Stamm testified that one district is approaching 75 percent

occupancy in all hospitals. Mr. Sullivan testified that, if and when that

occurs, then the formula is intended to, but does not, reflect the number of

additional beds needed. An alternative methodology is required to determine bed

need.

24. AHCA, with its responsibility for the data base formerly collected by

the HCCB, receives discharge data and financial worksheets from every hospital

in the state. The claim that AHCA cannot update the formulas because its data

may be unreliable is rejected as not credible. The data now available is more

reliable than the 1979 data used in developing the rule, which was not collected

from a formalized statewide reporting system, but from a sample of hospitals.

25. The claim that AHCA cannot use its data base from mandatory statewide

reporting mechanisms to extract the data needed to update the formulas is also

rejected. The rule contemplated ". . .the institution of statewide utilization

reporting mechanisms." Dr. Rond's work to update the formulas before the final

hearing began on May 23, 1995. Dr. Rond used a total of approximately 1.5

million acute care discharges from the AHCA (formerly, HCCB) data base for the

1992 calendar year. At the time of the final hearing, Dr. Rond had not

separated days of care for medical/surgical, intensive and coronary care. The

data can be taken from hospital financial data, including detailed budget

worksheets which are submitted to AHCA. Separate data are anticipated in the

formula because the computation of need for the different bed categories is

based on different occupancy goals. For medical/surgical and intensive care

beds, the goal is 80 percent occupancy, but it is 75 percent for coronary care

for persons age 0 to 64. For persons 65 and older, the rule applies a combined

occupancy standard of 79.7 percent for all three bed categories, which assumes

that approximately 4 percent of the combined days of older patients will be

spent in coronary care. Dr. Rond reasonably applied the 79.7 percent occupancy

standard to the combined days for persons under 65, in arriving at the total

district bed need for 3,676 beds. To check these results and to assume a worse

case scenario of all patient days attributable to coronary care beds, for which

more beds are needed to maintain a lower occupancy, Dr. Rond worked the formula

using 75 percent occupancy as the goal for medical/surgical, intensive and care

coronary care beds combined. Although the base number increased by 100, the

calculations and adjustments in the rule yielded the same number of total acute

care beds needed in the district, 3,676. That reliably confirms that the

maximum number of acute care beds needed in District 9 is 3,676 by 1999.

26. AHCA could use its data base to update formulas and achieve rational

results in the rule by using the hospital financial data to distinguish coronary

care days for patients 0-64 to include in the formula, or by using a rational

blended occupancy standard in a rule amending the existing methodology.

27. AHCA demonstrated that the 1987 amendment overrides the exaggerated

numeric need number to yield a rational published fixed need pool in the absence

of 75 percent occupancy in all acute care beds in a subdistrict. AHCA also

demonstrated that because the projected need is always excessive under the

formula, hospitals are allowed to demonstrate special circumstances, although it

is absurd to include a requirement of numeric need in a provision for special

circumstances. AHCA's claim that the excessive need projection is, therefore,

irrelevant is rejected. Net need under the rule formula fails to give any

rational indication of the number of beds needed when all hospitals in a

subdistrict reach 75 percent occupancy.

CONCLUSIONS OF LAW

28. The Division of Administrative Hearings has jurisdiction over the

subject matter and parties to this proceeding, pursuant to section 120.56,

Florida Statutes.

29. As stipulated by the parties, the Petitioner, Bethesda, has standing

to seek an administrative determination of the invalidity of the rule as

provided in subsection 120.56(1), Florida Statutes.

30. Rule 59C-1.008(2)(a)2 and 3, Florida Administrative Code, provide

that:

2. Any person who identifies an error in

the fixed need pool numbers must advise the

agency of the error within 10 days of publication

of the number. If the agency concurs in the

error, the fixed need pool number will be adjusted

and republished in the first available edition of

the Florida Administrative Weekly. Failure to

notify the agency of the error during this time

period will result in no adjustment to the fixed

need pool number for that batching cycle. Any

other adjustments will be made in the first cycle

subsequent to identification of an error, including

those errors identified through administrative

hearings or final judicial review.

3. Except as provided in subparagraph 2. above,

the batching cycle specific fixed need pools shall

not be changed or adjusted in the future regardless

of any future changes in need methodologies,

population estimates, bed inventories, or other

factors which would lead to different projections

of need, if retroactively applied. (Emphasis added.)

31. In Rule 59C-1.002(27), AHCA defined the term "fixed need pool" as

follows:

(27) 'Fixed Need Pool' means the identified

numerical need, as published in the Florida

Administratively Weekly, for new beds for services

for the applicable planning horizon established by

the agency in accordance with need methodologies

which are in effect by rule at the time of

publication of the fixed need pools for the

applicable batching cycle.

Based on this definition, Bethesda can maintain this challenge to formulas and

calculations which were made to determine the published numeric need, which were

not themselves published and do not alter the published need. The proper

application of a fixed need pool rule was not precluded from consideration in

St. Mary's Hospital v. DHRS, et al., DOAH Case No. 89-5115 (R.O. 3/15/91).

32. For Rule 59C-1.038, the challenged acute care bed need rule, which is

attached as an exhibit to this order, AHCA cites Subsections 408.15(8),

408.34(3) and (5), and 408.039(4)(a), Florida Statutes, as specific authority.

Subsections 408.34(3) and (5), Florida Statutes, provide:

(3) The department shall establish, by rule,

uniform need methodologies for health facilities.

In developing uniform need methodologies, the

department shall, at a minimum, consider the

demographic characteristics of the population,

the health status of the population, service use

patterns, standards and trends, geographic

accessibility, and market economics.

(5) The department may adopt rules as necessary

to implement ss. 381.701-381.75. [transferred to

ss. 408.031-408.045 by s. 15. ch. 42.33]

Subsection 408.15, in pertinent part, provides:

In addition to the powers granted to the agency

elsewhere in this chapter, the agency is

authorized to:

(8) Adopt, amend, and repeal all rules

necessary to carry out the provisions of this

chapter.

Section 408.039(4)(a) outlines the process for reviewing CON applications.

33. In addition to subsections 408.034(3) and 408.039(4)(a), citations to

the law implemented also include 408.035 and 408.036(1)(a), (b), (e), (h), which

are the CON review criteria and a list of projects which are subject to CON

review.

34. Section 120.52(8), F.S., defines "invalid exercise of delegated

legislative authority" as:

. . . action which goes beyond the powers,

functions and duties delegated by the Legislature.

A proposed or existing rule is an invalid exercise

of delegated legislative authority if any one or

more of the following apply:

(c) The rule enlarges, modifies, or contravenes

the specific provisions of law implemented, citation

to which is required by s. 120.54(7);

* * *

(e) The rule is arbitrary or capricious.

35. Bethesda challenges the rule as arbitrary and capricious and has the

burden of proof by a preponderance of evidence. Agrico Chemical Co. v.

Department of Environmental Protection, 365 So.2d 759 (Fla. 1st DCA 1979).

Bethesda must demonstrate: (1) that the agency adopting the rule has exceeded

its authority; (2) that the requirements of the rule are inappropriate to the

end specified in the legislative act; and (3) that the requirements contained in

the rule are not reasonably related to the purpose of the enabling legislation

but are arbitrary and capricious. State, Marine Fisheries Commission v.

Organized Fishermen of Florida, 503 So.2d 935 (Fla. 1st DCA 1987).

36. As defined in Agrico, a capricious action is one which is taken

without thought or reason or irrationally. An arbitrary decision is one not

supported by facts or logic or despotic.

37. All of the witnesses agree the need methodology formulas is the acute

care rule are irrational and lead to results not supported by facts or logic.

The only real issue is whether the 1987 amendment cures the defects in the

formula, producing a rational result. Since 1987, the amendment has provided a

rational result in two instances, when hospitals in a subdistrict do not all

reach 75 percent occupancy, and when any one hospital exceeds 75 percent

occupancy and seeks to demonstrate special or not normal circumstances. In a

third situation, when all hospitals in a subdistrict equal or exceed 75 percent

occupancy, the net need number is intended to, but does not give any reasonable

guidance for the number of beds needed. In that instance, net need is grossly

overestimated, which contravenes the purpose of a CON as evidencing community

need, and the cost containment criteria and goals in the CON statutes. Because

of the excess of acute care beds, AHCA has had very few applications, but there

is case law to suggest that after applications are filed, AHCA could be

precluded from repudiating its own need methodology. In National HealthCorp v.

DHRS, DOAH Case NO. 88-1836, 11 FALR 4314 (F.O. 7/18/89), AHCA's predecessor

held that a determination that only sixty-eight additional beds were needed was

violative of its rule, explaining that

The published net need for eighty nursing home

beds must be adhered to in this case based upon

the department's policy that a fixed need pool

cannot be changed once it is published in the

Florida Administrative Code, after the grace

period of Rule 10-5.008(1)(b), Florida

Administrative Code, has elapsed.

11 FALR 4314 at 4316.

ORDER

The Petition For An Administrative Determination of the Invalidity of An

Agency Rule is GRANTED.

Subsections (5), (6), (7)(a), (b), and (c) of Rule 59C-1.038, Florida

Administrative Code, are invalid, as an invalid exercise of delegated

legislative authority.

DONE AND ENTERED this 17th day of August, 1995, in Tallahassee, Leon

County, Florida.

___________________________________

ELEANOR M. HUNTER

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 17th day of August, 1995.

APPENDIX TO FINAL ORDER, CASE NO. 95-2649RX

To comply with the requirements of Section 120.59(2), Fla. Stat. (1991),

the following rulings are made on the parties' proposed findings of fact:

Petitioner Bethesda Memorial's Proposed Findings of Fact.

1. Accepted in Findings of Fact 9 and 11.

2. Accepted in Findings of Fact 11-16.

3. Accepted in or subordinate to Findings of Fact 11-16.

4. Accepted in Findings of Fact 19 and 22.

5. Accepted in Findings of Fact 25.

6. Accepted in Findings of Fact 10 and 11.

7. Accepted in Findings of Fact 19 and conclusions of law 37.

8. Accepted in Findings of Fact 12 and 19.

9. Accepted in Findings of Fact 12-8.

10. Accepted in Findings of Fact 13 and 25.

11. Accepted in Findings of Fact 13 and 25.

12. Accepted in Findings of Fact 14.

13. Accepted in Findings of Fact 15.

14. Accepted in Findings of Fact 9 and 10.

15. Accepted in Findings of Fact 19.

16. Accepted in Findings of Fact 22.

17. Accepted in Findings of Fact 19 and 24.

18. Accepted in Findings of Fact 10.

19. Accepted in Findings of Fact 13.

20. Accepted in Findings of Fact 8.

Intervenor NME's Proposed Findings of Fact.

1. Accepted in Findings of Fact 1.

2. Accepted in Findings of Fact 3, 7, 8, 13-17.

3. Accepted in Findings of Fact 9.

4. Subordinate to Findings of Fact 9.

5. Accepted in Findings of Fact 7 and 10.

6. Accepted in general in Findings of Fact 11.

7. Accepted in Findings of Fact 7, 10 and 12-16 and 19.

8. Accepted in Findings of Fact 8.

9. Accepted in Findings of Fact 8.

10-11. Accepted in Findings of Fact 17.

12. Accepted for published fixed need pool in Findings of Fact 18,

rejected for net need in Findings of Fact 18.

13-14. Accepted in part and rejected in part in Findings of Fact 20.

15. Accepted in part and rejected in part in Findings of Fact 17, 18 and

20.

16. Accepted in part in Findings of Fact 20 and 21.

17. Accepted in part in Findings of Fact 25 and 26.

18. Accepted.

19. Rejected in Findings of Fact 23-26.

20. Accepted in Findings of Fact 7 and 8.

Respondent, AHCA's Proposed Findings of Fact.

1. Accepted in Findings of Fact 10.

2. Accepted in general in Findings of Fact 11.

3. Rejected in Findings of Fact 12 and 19.

4-5. Accepted in Findings of Fact 13-16 and 19.

6-8. Accepted in Findings of Fact 17 and 19.

9. Rejected in Findings of Fact 23.

10. Accepted in Findings of Fact 20 and 23.

11. Accepted in Findings of Fact 20.

COPIES FURNISHED:

Kenneth G. Hoffman, Esquire

W. David Watkins, Esquire

Oertel, Hoffman, Fernandez & Cole, P.A.

Post Office Box 6507

2700 Blair Stone Road

Tallahassee, Florida 32314-6507

John Gilroy, Esquire

Agency for Health Care Administration

2727 Mahan Drive

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

Michael J. Glazer, Esquire

Macfarlane, Ausley, Ferguson & McMullen

Post Office Box 391

227 South Calhoun Street

Tallahassee, Florida 32302

R. S. Power, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

Tom Wallace

Assistant Director

Agency for Health Care Administration

2727 Mahan Drive

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

Liz Cloud, Chief

Bureau of Administrative Code

The Capitol, Room 1802

Tallahassee, Florida 32399-0250

Carroll Webb, Executive Director

Administrative Procedures Committee

Holland Building, Room 120

Tallahassee, Florida 32399-1300

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this final order is entitled to judicial

review pursuant to Section 120.68, Florida Statutes. Review proceedings are

governed by the Florida Rules of Appellate procedure. Such proceedings are

commenced by filing one copy of a Notice of Appeal with the agency clerk of the

Division of Administrative Hearings and a second copy, accompanied by filing

fees prescribed by law, with the District Court of Appeal, First District, or

with the District Court of Appeal in the appellate district where the party

resides. The Notice of Appeal must be filed within 30 days of rendition of the

order to be reviewed.