In re Green Village Skilled Nursing Ctr.

SUPREME COURT CASES

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State: Ohio

Docket No: 2012-Ohio-3769

Case Date: 08/21/2012

Preview:[Cite as In re Green Village Skilled Nursing Ctr., 2012-Ohio-3769.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
In re:                                                                                       :
Green Village Skilled Nursing Center,                                                        :
No. 12AP-91
(Jarvis Leasing Company, LLC, d.b.a.                                                         :   (ODH File No. 9029-01-10X)
Pebble Creek Healthcare Center,
                                                                                             :   (ACCELERATED CALENDAR)
Appellant).
                                                                                             :
D    E    C    I    S    I    O    N
Rendered on August 21, 2012
Taft, Stettinius & Hollister LLP, Eric M. Simon, and Mark R.
Jacobs, for appellee Green Village Realty, Ltd.
Dinsmore & Shohl LLP, and Thomas W. Hess, for appellant.
Michael DeWine, Attorney General, and Lisa M. Eschbacher,
for Director, Ohio Department of Health.
APPEAL from the Ohio Department of Health.
SADLER, J.
{¶ 1}  Appellant, Jarvis Leasing Company, LLC, d.b.a. Pebble Creek Healthcare
Center ("appellant"), appeals from an order of the director of the Ohio Department of
Health ("the director"), granting a certificate of need ("CON") to appellee, Green Village
Realty, Ltd.  ("the applicant").    Because the director's order is supported by reliable,
probative, and substantial evidence and is in accordance with law, we affirm.

No. 12AP-91                                                                                       2
I.  BACKGROUND
{¶ 2}  On July  30,  2010, the applicant submitted a CON  application seeking
approval of a project to purchase and relocate 72 licensed nursing home beds from the
Andover Village Retirement Community in Ashtabula County, Ohio to an all-private room
skilled nursing home facility to be constructed in Summit County, Ohio to be called Green
Village Skilled Nursing Center.
{¶ 3}  The  Ohio  Department  of  Health  ("ODH")  submitted  two  requests  for
additional information.   After the applicant responded to both requests, ODH declared
the application complete on February 28, 2011.   On March 29, 2011, appellant, a long-
term nursing care facility located less than one mile from the proposed project, filed a
written objection to the CON application and requested a hearing.
{¶ 4}  An ODH hearing examiner conducted a four-day adjudication hearing on
the applicant's CON application.   At the hearing, appellant argued that the proposed
facility is not needed and is not financially feasible and that the applicant had not met all
of the relevant criteria for approval of the application.  On December 14, 2011, the hearing
examiner  issued  a  report  and  recommendation  in  which  he  advised  that  the  CON
application be granted.   Indeed, the hearing examiner concluded that appellant "failed to
carry its burden of proof as to its allegations that the Director has insufficient information
to evaluate the application, that the project is not needed, or that the project is financially
unfeasible.  Accordingly, the Objector has failed to establish that the application should be
denied."                                                                                          (Report and Recommendation, 30.)   Appellant filed objections to the hearing
examiner's report and recommendation.   By adjudication order dated January 24, 2012,
the director approved the CON application.
II.  ASSIGNMENTS OF ERROR
{¶ 5}  On appeal, appellant sets forth the following three assignments of error for
this court's review:
[1.]  The  Adjudication  Order  is  not  supported  by  reliable,
probative, and substantial evidence and is not in accordance
with the law because the Ohio Department of Health gave
excessive weight to the statutory formula.
[2.]  The  Adjudication  Order  is  not  supported  by  reliable,
probative, and substantial evidence and is not in accordance

No. 12AP-91                                                                                       3
with the law because the Director failed to properly consider
the evidence of the CON project's impact on surrounding
facilities, lack of unique services, and the impact on area
staffing.
[3.]  The  Adjudication  Order  is  not  supported  by  reliable,
probative, and substantial evidence and is not in accordance
with the law because the Director failed to properly consider
the evidence that the project is not financially feasible and
relied upon improperly submitted evidence.
{¶ 6}  R.C. 3702.52(C)(1) provides in part: "If the project proposed in a certificate
of need application meets all of the applicable certificate of need criteria for approval
under sections 3702.51 to 3702.62 of the Revised Code and the rules adopted under those
sections, the director shall grant a certificate of need for all or part of the project that is
the subject of the application by the applicable deadline."    During the adjudication
hearing, "[t]he affected persons bear the burden of proving by a preponderance of
evidence that the project is not needed or that granting the certificate would not be in
accordance with sections 3702.51 to 3702.62 of the Revised Code or the rules adopted
under those sections."  R.C. 3702.52(C)(3).
{¶ 7}  R.C. 3702.60(F)(3) provides that in an appeal to this court from a decision
granting or denying a CON application, this court must "affirm the director's order if it
finds, upon consideration of the entire record and any additional evidence admitted * * *
that the order is supported by reliable, probative, and substantial evidence and is in
accordance with law.   In the absence of such a finding, it shall reverse, vacate, or modify
the order."
{¶ 8}  Accordingly, upon appeal to this court, appellant must demonstrate that
either  the  director's  factual  findings  are  not  supported  by  reliable,  probative,  and
substantial evidence or that the director improperly applied the law to the findings of fact.
In re The Knolls of Oxford, 10th Dist. No. 02AP-514, 2003-Ohio-89, ¶ 13. "Analysis of
whether the director's decision is supported by the evidence is essentially a question of the
absence or presence of the requisite quantum of evidence."   In re Doylestown Parke
Rehab. Ctr., 10th Dist. No. 09AP-694, 2010-Ohio-2064, ¶ 6, citing In re Manor Care of
Parma, 10th Dist. No. 05AP-398, 2005-Ohio-5703, ¶ 9.

No. 12AP-91                                                                                         4
III.  DISCUSSION
A.  First Assignment of Error
{¶ 9}  In  its  first  assignment  of  error,  appellant  contends  the  director  acted
contrary to law by placing exclusive reliance on the bed-need formula set forth in Ohio
Adm.Code 3701-12-23.  Appellant maintains the director failed to consider other evidence
that the project is not needed, including evidence of lack of need in the surrounding
geographic area, including adjacent counties.
{¶ 10} Ohio  Adm.Code                                                                               3701-12-20  sets  forth  the  criteria  the  director  must
consider in determining whether to grant a CON to the applicant.   Ohio Adm.Code 3701-
12-20(A) specifies that "[t]he director shall apply each of the criteria prescribed in this
rule, as applicable, when reviewing an application for a certificate of need, in addition to
any  criteria  specific  to  the  application  that  are  established  by  this  chapter  of  the
Administrative Code and sections 3702.51 to 3702.62 of the Revised Code."
{¶ 11} Ohio Adm.Code 3701-12-20(E) requires the director to consider "the need
that the population served or proposed to be served has for the services to be provided
upon implementation of the project."   In assessing the need for the project, the director
must examine: (1) the current and proposed primary and secondary service areas and
their population, (2) travel times and the accessibility of the project site, (3) current and
projected patient origin data by zip code, (4) any special needs and circumstances of the
applicant or population proposed to be served by the proposed project, and (5) special
needs related to any research activities.  Ohio Adm. Code 3701-12-20(E)(1) through (5).
{¶ 12} The project at issue involves inter-county bed relocation authorized by R.C.
3702.593(A), which states that the director must accept for review CON applications for
the approval of beds in a new health care facility "if the proposed increase in beds is
attributable solely to relocation of existing beds from an existing health care facility in a
county with excess beds to a health care facility in a county in which there are fewer long-
term care beds than the county's bed need."   R.C. 3702.593(B)(1) provides that "[f]or the
purpose of implementing this section," the director must "[d]etermine the long-term care
bed supply for each county."   The director must also "[f]or each county, determine the
county's bed need by identifying the number of long-term care beds that would be needed
in the county in order for the statewide occupancy rate for a projected population aged

No. 12AP-91                                                                                      5
sixty-five and older to be ninety per cent."  R.C. 3702.593(B)(3) further provides that "[i]n
determining each county's bed need, the director shall use the formula developed in rules
adopted under section 3702.57 of the Revised Code."
{¶ 13} Appellant argues that utilization of county borders is an inappropriate and
ineffective  means  of  determining  bed  need,  and  that  a  need  analysis  must  include
consideration of the need for beds in adjacent counties.  Appellant supports this argument
with the testimony of its expert witnesses, Dr. Robert Applebaum, Director of the Ohio
Long-Term-Care  Project  at  the  Scripps  Gerontology  Center  at  Miami  University  in
Oxford, Ohio, and Daniel Sullivan, a consultant in the area of healthcare planning and
development of rules and bed-need methodologies related to state long-term care CON
programs.    Both  witnesses  opined that  county boundaries  provide an  artificial  and
arbitrary mechanism for determining bed need.   The hearing examiner addressed and
rejected this argument in Finding of Fact No. 17:
The evidence does not establish that the project is not needed.
It is undisputed that, under the bed need formula, Summit
County  has  a  need  for  substantially  more  beds  than  the
Applicant proposes to transfer.    The bed need formula is
established   by   statute   and   has   been   determined   by
independent  experts  to  be  valid.    To  alter  or  modify  the
formula by considering the proximity of over-bedded counties
would be contrary to law.
(Report and Recommendation, 27.)
{¶ 14} The  hearing  examiner  properly  rejected  appellant's  contention,  as  the
director is statutorily required to determine bed need by county.  R.C. 3702.593(B)(1) and
(3).   Appellant points to no contrary legal authority.   Moreover, Applebaum, appellant's
own expert witness, confirmed that CON legislation mandates the use of county borders
in determining bed need.
{¶ 15} Additionally,  although  appellant  rightly  asserts  that  the  director  acts
contrary  to  law  in  placing  exclusive  reliance  on  the  statutory  bed-need  formula  in

No. 12AP-91                                                                                                         6
reviewing a CON application,1 the record does not support a finding that it was so used.
In Finding of Fact No. 9, the hearing examiner discussed appellant's evidence as to need
for the project:
The Objector offered testimony that the project is not needed.
Specifically, the Objector offered testimony that Pebble Creek
and other facilities in the proposed service area are able to
offer  all  of  the  services  proposed  to  be  offered  by  the
Applicant, and that Pebble Creek, though it is close to full
occupancy, does not have a waiting list for admissions.
(Report and Recommendation, 25.)
{¶ 16} In Finding of Fact No.  12, the hearing examiner noted the applicant's
evidence as to need for the project:
The Applicant offered testimony that the project is needed,
including testimony as to the bed need in Summit County and
the projected demographic trends in the area.   The Applicant
also offered testimony that private rooms are preferred by
prospective residents.
(Report and Recommendation, 25.)
{¶ 17} These  findings  clearly  establish  that  the  hearing  examiner  considered
evidence beyond the statutory bed-need formula.
{¶ 18} Further,  although  the  bed-need  formula  is  not  the  only  factor  to  be
considered by the director, it is, nonetheless, an important factor in determining overall
need for a CON project, and the director is required by statute and rule to consider it
when determining need.   See R.C. 3702.593(B)(3); Ohio Adm.Code 3701-12-23(B).   Both
Applebaum and Sullivan acknowledged that pursuant to the statutory bed-need formula,
Summit County is underbedded by 286 beds, well in excess of the 72 beds to be provided
via the proposed project.
{¶ 19} As to need for the project distinct from the bed-need formula, the applicant
offered the testimony of Christine Kenney, a recently retired administrator of ODH's CON
1 This court has held that "the bed need formula is but one factor which must be considered when reviewing
a CON application.   Reliance on the formula to the exclusion of all other criteria is reversible error."   In re
Villa Springfield, 10th Dist. No. 89AP-1134 (Mar. 29, 1990), citing In re Jefferson Health Care Ctr., 10th
Dist. No. 89AP-182 (Aug. 15, 1989); Oak Park Manor v. State Certificate of Need Rev. Bd., 27 Ohio App.3d
216 (10th Dist.1985).

No. 12AP-91                                                                                    7
program  and  current  director  of  Regulatory  Services  with  Quality  Management
Consulting Group.   Kenney testified that she independently examined the need for the
proposed project within the service area identified in the CON application and prepared a
report of her findings.   In the report, Kenney documented pertinent statistics for the
nursing  homes  identified  in  the  CON  application  as  being  within  the  primary  and
secondary service areas of the proposed project, including number of beds and occupancy
rates.   In particular, Kenney noted that 7 of the 12 nursing homes in the proposed service
area have occupancy rates above 90 percent, the statewide target for bed occupancy.  She
further noted that the facilities whose occupancy rates are less than 90 percent are "older"
facilities, opening  between  1954 and  1986.    Kenney also documented the projected
increase in the over 65 population in the service area between 2010 and 2015, applied the
state bed-need formula to the projected  2015 population, and concluded there is a
significant bed deficit in the service area.   She further noted the trend toward developing
single-occupancy nursing home rooms with dedicated toilet and shower facilities and
noted the paucity of private rooms in the service area.
{¶ 20} Based on her research and report, Kenney opined that the proposed project
will meet a need for healthcare services not currently provided in the proposed service
area.  Specifically, Kenney opined that there is a need for additional beds in the projected
service area for the 2015 population and, in particular, a need for private rooms.   Kenney
testified that the trend in long-term nursing home care toward private rooms derives both
from residents' desire for privacy and research that private rooms provide clinical benefits
to residents.
{¶ 21} Michael Francus, the appellant's managing member and the operator of the
proposed facility, testified that private rooms significantly improve infection control and
eliminate psychosocial issues.   Appellant's own expert, Applebaum, acknowledged the
trend in long-term nursing home care toward greater privacy for residents, which includes
private rooms with private bathrooms.
{¶ 22} Appellant argues that its witnesses established the lack of need for the
proposed project.   Sullivan opined that Summit County's average occupancy rate of 89
percent, which falls below the state's targeted occupancy rate of 90 percent, demonstrates
the lack of need for the proposed project.   Sullivan further averred there is no evidence

No. 12AP-91                                                                                    8
that Summit County will experience significant population growth in the future or an
increased demand for nursing home beds.   Sullivan also averred that the number of
nursing home patient days in Summit County has declined in recent years despite the
significant increase in the over  65 population, and, accordingly, the market will not
experience growth sufficient to absorb an additional 72 beds.
{¶ 23} Jennifer  Eiswerth,  appellant's  licensed  executive  director,  testified  that
appellant opposes the CON application because the project is not needed.    Eiswerth
averred that appellant does not have a waiting list for admissions and has never declined
prospective patients due to lack of services.
{¶ 24} Upon  review,  the  record  sufficiently  supports  the  hearing  examiner's
determination that appellant failed to prove, by a preponderance of the evidence, that the
project is not needed.    Presented with conflicting testimony as to need, the hearing
examiner gave weight to the evidence regarding the demographic trends in Summit
County and the need for private beds.   "Although this court may engage in a very limited
weighing of the evidence upon an appeal of this nature, we may not substitute our
judgment for that of the [director] as to the credibility of witnesses and the weight to be
given the testimony."   In re The Knolls of Oxford at ¶ 13, citing In re Manor Care of
Kettering, 10th Dist. No. 92AP-208 (Dec. 31, 1992); In re Mill Run Care Ctr. and New
Albany Care Ctr., 10th Dist. No. 94APH04-591 (Dec. 20, 1994).  Rather, a reviewing court
must afford due deference to the administrative resolution of evidentiary conflicts.   In re
Doylestown at ¶ 6, citing In Re Manor Care of Parma at ¶ 9, citing In re Christian Care
Home of Cincinnati, Inc., 74 Ohio App.3d 453 (10th Dist.1991).
{¶ 25} Appellant also contends under its first assignment of error that the director
failed to consider mathematical flaws in the statutory bed-need formula.  Sullivan testified
that the formula utilized by the director in assessing bed need contains a mathematical
error.  According to Sullivan, dividing the total statewide bed need by the population over
65 multiplied by  1,000 results in a bed need rate of  51.2 beds per every thousand
individuals over age  65, not  53.3 beds per every thousand individuals over age  65.
Sullivan averred that from an operational perspective, this overstatement reduces the bed
need by about two beds per every thousand individuals over age 65 in every county,
including Summit County.   Thus, according to Sullivan, the director's determination that

No. 12AP-91                                                                                       9
Summit County is underbedded by 286 beds overstates the bed need by approximately
100 beds.  However, assuming arguendo that Sullivan's calculations are accurate, Summit
County remains underbedded by 186 beds, which is significantly more than the 72 beds
proposed for transfer in the applicant's CON application.
{¶ 26} Appellant further contends the director failed to consider "methodological
deficiencies" in the statutory bed-need formula.   Appellant maintains that the formula is
flawed because it does not account for factors such as declining occupancy rates and
nursing home demand.   However, Applebaum, appellant's own expert witness, testified
that the statutory formula and methodology was verified by Scripps Gerontology prior to
implementation  by  the  director.    Indeed,  Applebaum  testified  that  "we,  essentially,
concluded that the methodology used by the Department of Health to implement the
legislation appeared valid to us."   (Tr. Vol. I, 17.)  He further averred that the methodology
used by ODH to implement R.C. 3702.593 is valid, and that the director created the bed-
need formula following statutory guidelines set forth by the General Assembly.   Based
upon this testimony, the hearing examiner found in Finding of Fact No. 17 that "[t]he bed
need formula is established by statute and has been determined by independent experts
to be valid."  (Report and Recommendation, 27.)
{¶ 27} For  the  foregoing  reasons,  we  find  there  is  reliable,  probative,  and
substantial evidence to support the determination of the hearing examiner and the
director that the proposed project is needed, and that appellant failed to establish that
appellee  did  not  comply  with  the  requirements  of  Ohio  Adm.Code  3701-12-20(E).
Accordingly, appellant's first assignment of error is overruled.
B.  Second Assignment of Error
{¶ 28} In its second assignment of error, appellant contends the hearing examiner
failed to properly consider evidence of the proposed project's impact on surrounding
facilities, lack of unique services, and the impact on area staffing.
{¶ 29} Ohio Adm.Code  3701-12-20(F) provides that the director must consider
"the impact of the project on all other providers of similar services in the service area
specified by the applicant including the impact on their utilization, market share and
financial status."   Ohio Adm. Code 3701-12-20(K) requires the director to consider "the

No. 12AP-91                                                                                       10
impact of the project on existing staffing levels, if applicable, and the availability of
personnel resources to meet the applicant's projected requirements."
{¶ 30} Here, the hearing examiner found that the applicant provided sufficient
evidence on the issue of impact and noted that some impact will result from the new
facility.  The hearing examiner specifically found in Finding of Fact No. 18:
The evidence establishes that the proposed new facility will
have an impact on the Objector's facility, as well as other
providers  in  the  area.    The  evidence  also  establishes  the
existence of unrelated factors that may contribute to census
challenges  and  staff  retention  at  the  Objector's  facility,
including  the  facility's  age,  the  unavailability  of  a  large
number of private rooms, and the fact that the facility is not
located on a bus line.   Further, the evidence establishes that
the Objector's facility may be in a better position than other
facilities to weather the opening of the new facility, because of
its excellent management and operation and current  high
census.
(Report and Recommendation, 27.)
{¶ 31} The record supports the hearing examiner's findings.  As to impact on other
area providers, Kenney testified that although existing facilities in a service area inevitably
experience some impact from the opening of a new facility, such impact is typically
"diffused over all facilities within the area."                                                   (Tr. Vol. III, 354.)   Kenney averred that
although appellant is the closest existing facility to the proposed project, it would "not
necessarily" experience the greatest impact.   (Tr. Vol. III, 354.)
{¶ 32} Francus testified that any adverse impact on appellant will be minimized
because of the applicant's expected contracts with SummaCare and United Healthcare,
two insurers with which appellant does not have contracts.    He stated that "we are
attracting referral sources that [appellant] either does not have or cannot have."   (Tr. Vol.
II, 246.)   Francus further averred that appellant was "in a better position than most to
meet  the  competition"  due  to  its  excellent  management  and  operation  and  high
occupancy rates.   (Tr. Vol. II, 234.)
{¶ 33} In addition, the record contains evidence suggesting that any impact on
appellant's  facility  will  benefit  area  residents.    For  example,  Francus  averred  that
competition among facilities breeds improvement which ultimately benefits residents.

No. 12AP-91                                                                                         11
Indeed, he testified that "when you have two nice facilities in the area, it does raise the
[quality] bar, and the ultimate beneficiary of that is going to be the resident."   (Tr. Vol. II,
232.)   Appellant's own expert, Sullivan, acknowledged that competition between facilities
is both necessary and beneficial.  Indeed, Sullivan stated, "I don't think you want to have a
situation where you have a monolithic provider; there is no competition."                           (Tr. Vol. I,
108.)
{¶ 34} The hearing examiner noted the applicant's impact testimony in Finding of
Fact No. 13:
The Applicant offered testimony that the new facility would
not  have  an  overly  adverse  effect  on  Pebble  Creek.    The
Applicant offered testimony that the distance from the new
facility to Pebble Creek is 3.8 miles.  Ms. Kenney testified that
Pebble  Creek,  as  the  closest  existing  facility,  would  not
necessarily  experience  the  greatest  impact.    Mr.  Francus
testified that he believes competition for residents with Pebble
Creek would be minimized by the probability that the new
facility will have insurance provider agreements that are not
available at Pebble Creek.
(Report and Recommendation, 26.)
{¶ 35} Appellant points to testimony offered by Sullivan and Eiswerth averring
that the proposed project will detrimentally affect appellant and other providers in the
service area.  Indeed, both witnesses testified that 70 percent of appellant's patients come
from the service area upon which the applicant proposes to draw.   Sullivan opined that
because the applicant will not provide any services unique to those already provided by
existing facilities, and due to the lack of future demand for nursing home services, the
applicant will necessarily have to attract patients who would otherwise be served by
existing providers, including appellant.   Indeed, Sullivan opined that appellant, as the
closest existing provider, will experience "a pretty significant impact" from a new facility.
(Tr. Vol. I, 83.)   Eiswerth echoed Sullivan's opinion, testifying that the applicant will
provide only duplicative services and will negatively impact appellant with respect to
occupancy rates, finances, and quality of care and services.
{¶ 36} The hearing examiner noted appellant's impact testimony in Finding of Fact
No. 8, stating:

No. 12AP-91                                                                                       12
The Objector offered testimony that Pebble Creek would be
severely impacted, both in its resident census and its ability to
attract and retain staff, by the proposed facility, because of its
close proximity to Pebble Creek, the fact that it will be a new
facility and an attractive employer, the fact that it will consist
of all private rooms, and because a majority of Pebble Creek's
residents are drawn from the proposed service area."
(Report and Recommendation, 24-25.)
{¶ 37} Presented with conflicting testimony as to the impact on other providers in
the service area, including appellant, the hearing examiner gave weight to the testimony
that appellant will be able to successfully withstand the opening of a new facility.   The
hearing examiner also noted there are other unrelated factors that pose a challenge to
appellant's continued viability, including the facility's age and the unavailability of private
rooms.  As noted above, this court may not substitute its judgment for that of the hearing
examiner  as  to  witness  credibility  and  weight  of  the  evidence  and  must  defer  to
administrative determinations involving evidentiary conflicts.
{¶ 38} This court has acknowledged that "any new facility will initially impact
existing providers to some extent, and if some impact was sufficient to deny a CON, then
few, if any, would ever be approved."  In re Doylestown at ¶ 15, citing In re Manor Care of
Parma at ¶ 51.   Here, the hearing examiner considered all the evidence and concluded
that while appellant will likely experience some impact from the proposed project, it will
ultimately remain competitive.
{¶ 39} As to the impact of the proposed project on existing staffing levels and the
availability of personnel resources to meet the applicant's projected needs, we note that
Section 10.24 of the CON application requests information pertaining to the "availability
of qualified personnel to provide the additional staff required and the impact on other
area health care providers of recruiting them."   The applicant provided the following
response to this inquiry:
The   proposed   facility   will   be   located   in   an   area
(Akron/Canton) of high unemployment, providing a wealth of
potential employees from which the best, most qualified can
be  selected.                                                                                     Moreover,  the  nursing  school  at  nearby
University of Akron should prove to be a terrific source of
qualified  skilled  staff  for  the  new  facility.     Kent  State

No. 12AP-91                                                                                      13
University, which also operates a vibrant College of Nursing,
is proximate to the new facility, and will likely become a
source for skilled staff for Green Village.
(Joint exhibit No. 1, 51.)
{¶ 40} It is reasonable to assume that staff recruitment and retention will be
relatively easy at a new, state-of-the-art facility.   In addition, Francus testified that the
proposed project is located on a bus line which provides bus stops within a reasonable
walking distance for employees.
{¶ 41} For appellant's part, Eiswerth testified that since January 1, 2010, appellant
has  had  difficulty  recruiting  and  retaining  nurse  and  nurses'  aides.    According  to
Eiswerth, the   facility experienced a 22 percent employee turnover rate in 2010 and a 42
percent employee turnover rate in 2011.   Eiswerth opined that the opening of a new
facility will exacerbate appellant's staffing issues.
{¶ 42} The  hearing  examiner  recognized  that  appellant's  challenges  with  staff
retention result, at least partially, from the fact that the facility is not situated on a bus
line.   This finding is supported by the testimony of Eiswerth, who averred that appellant
does not have bus service and is located at least one-half mile from a bus stop.
{¶ 43} As noted above, the hearing examiner considered the conflicting evidence
presented  and  gave  credence  to  the  applicant's  evidence  regarding  the  impact  the
proposed project will have on existing staffing levels and the availability of personnel
resources to meet the applicant's projected needs.   We reiterate that this court may not
substitute its judgment for that of the hearing examiner as to witness credibility and
weight  of  the  evidence  and  must  defer  to  administrative  determinations  involving
evidentiary conflicts.
{¶ 44} Appellant finally contends under its second assignment of error that the
hearing examiner and the director failed to consider "whether the proposed facility brings
anything  unique  to  the  area."                                                                (Brief  at   12.)   Appellant  argues  that  the  evidence
demonstrates that all of the applicant's proposed services are already provided by existing
facilities in the service area, and that the hearing examiner and the director did not "adopt
or write any findings on this evidence put forth by Appellant."   (Brief at 12.)

No. 12AP-91                                                                                         14
{¶ 45} The record demonstrates that the hearing  examiner considered all the
evidence pertaining to whether the proposed project will provide only duplicative services.
In Finding of Fact No. 9, the hearing examiner noted that appellant presented testimony
that it and other facilities in the proposed service area can provide all of the services
proposed to be offered by the applicant.   In Finding of Fact No. 12, the hearing examiner
noted that the applicant offered evidence that its facility will provide private rooms.  Thus,
contrary to appellant's assertion, it is clear that the hearing examiner considered whether
the proposed project will provide additional benefits to the service area that would
otherwise not be available.
{¶ 46} For  the  foregoing  reasons,  we  find  there  is  reliable,  probative,  and
substantial evidence to support the determination of the hearing examiner and the
director regarding the proposed project's impact on other providers in the service area
and on staffing levels, and that appellant failed to establish that the applicant did not
comply with the criteria set forth in Ohio Adm.Code 3701-12-20(F) and (K).  Accordingly,
the second assignment of error is overruled.
C.  Third Assignment of Error
{¶ 47} In its third assignment of error, appellant contends the hearing examiner
failed to properly consider evidence that the project is not financially feasible.   Appellant
further maintains the hearing examiner relied on improperly submitted evidence in
determining financial feasibility.
{¶ 48} Ohio Adm. Code 3701-12-20(J) requires the director to consider "the short-
term and long-term financial feasibility and the cost effectiveness of the project and its
financial impact upon the applicant, other providers, health care consumers and the
medicaid program established under Chapter 5111. of the Revised Code."   Among other
relevant matters, the director must evaluate (1) the availability of financing for the project,
including all pertinent terms of any borrowing, if applicable,  (2) the operating costs
specific to the project and the effect of these costs on the operating costs of the facility as a
whole based upon review of balance sheets, cash flow statements, and audited financial
statements, (3) the effect of the project on charges and payment rates for the facility as a
whole and specific to the project, (4) the costs and charges associated with the project
compared to the costs and charges associated with similar services furnished or proposed

No. 12AP-91                                                                                       15
to be furnished by other providers, and (5) the historical performance of the applicant and
related parties in providing cost-effective health care services.   Ohio Adm.Code 3701-12-
20(J)(1) through (5).
{¶ 49} We initially consider appellant's argument that the hearing examiner relied
on improperly submitted evidence in determining financial feasibility.  On the second day
of the hearing, counsel for appellant and the applicant discussed the fact that certain
financial information included in the original CON application required modification.
Counsel for the applicant delineated the modifications and averred that the applicant's
financial experts would testify about the modifications and their impact on the project's
financial feasibility.   Counsel for appellant stipulated to the fact that the applicant would
present updated financial information and requested that appellant's financial expert be
permitted to review the updated financial information prior to offering testimony as to the
financial  feasibility  of  the  proposed  project.    The  hearing  examiner  agreed  to  this
arrangement.
{¶ 50} In accordance therewith, the applicant's financial experts, Robert Pumphrey
and Russell Corwin, testified in detail about the revisions made to the original CON
application and their effect on the project's financial feasibility.   Thereafter, appellant's
financial expert, Jeff Heaphy, offered detailed testimony regarding the revised CON
application and the financial feasibility of the project.
{¶ 51} Appellant now complains that the hearing examiner improperly permitted
the revised financials.   A party generally waives the right to appeal an issue that could
have been but was not raised in earlier proceedings.    MacConnell v. Ohio Dept. of
Commerce, 10th Dist. No. 04AP-433, 2005-Ohio-1960, ¶ 21, citing Am. Legion Post 200
v. Ohio Liquor Control Comm., 10th Dist. No 01AP-684 (Dec. 20, 2001).   This general
principle has been applied to appeals from administrative agencies.   MacConnell.   Thus,
the failure to raise procedural or evidentiary objections at the administrative level waives
those objections for purposes of a subsequent administrative appeal.   Trish's Café &
Catering, Inc. v. Ohio Dept. of Health, 195 Ohio App.3d 612, 2011-Ohio-3304, ¶ 19 (10th
Dist.).   Here, appellant not only failed to object to the submission of the revised financial
information, it actually acquiesced in its submission with the proviso that its expert be
permitted to review the modifications prior to testifying about the project's financial

No. 12AP-91                                                                                       16
feasibility.   Appellant does not dispute that its expert reviewed the revised financials
before testifying.   Based on the above authority, we conclude that appellant's failure to
object to the introduction of the revised financials constitutes a waiver of that issue for
purposes of these administrative appeal proceedings.
{¶ 52} Accordingly, we turn now to appellant's substantive argument.   In essence,
appellant contends the hearing examiner did not properly consider its evidence that the
project is not financially feasible.  Appellant argues that testimony from it financial expert,
Heaphy, establishes that the project is financially unfeasible.   Heaphy testified that the
applicant overstated the occupancy rate for Medicare Part A residents as well as the
projected reimbursement rate for Medicaid residents, and that these errors resulted in
overprojected revenue of $874,000 in the second and third years of operation.  He further
averred that the reduced revenue would result in a net operating loss for those years.
Accordingly, Heaphy opined that the proposed project is not financially feasible.
{¶ 53} However, the applicant's financial experts, Pumphrey and Corwin, opined
that the project is financially feasible.    Pumphrey opined that although the revised
financials result in decreased projected net income from that set forth in the original CON
application,  "[t]he  project  still  makes  economic  sense  based  upon  these  [adjusted]
financials."                                                                                      (Tr. Vol. III, 304.)   He specifically averred that "[t]hey do have positive cash
flow.   They do have positive income levels in each year, even the year of startup [and]
there is positive debt-service-coverage ratios."                                                  (Tr. Vol. III, 304.)   According to Corwin,
the project remained "a very viable project on a financial basis" even with the revisions to
the financials.                                                                                   (Tr. Vol. IV, 369.)   Corwin opined that projected changes to Medicare
reimbursement will not negatively impact the project's financial viability.
{¶ 54} The record indicates that the hearing examiner considered the competing
testimony with regard to financial feasibility.   In Finding of Fact No. 10, the hearing
examiner outlined Heaphy's testimony:
Mr.  Heaphy  *  *                                                                                 *  questioned  the  Applicant's  proposed
Medicare Part A occupancy rate, stating that rate is higher
than the actual performance of the Applicant's other facilities.
Mr. Heaphy also opined that the Applicant's proposed daily
rate  for  "other"  expenses,  including  ancillary  costs,  is
unreasonably  high.    Finally,  Mr.  Heaphy  opined  that  the
Applicant underestimated the effect of legislative reductions

No. 12AP-91                                                                                      17
in Medicaid reimbursement rates.  On cross-examination, Mr.
Heaphy conceded that some facilities have a Medicare Part A
mix equal to or higher than the Applicant's projections, and
that the availability of private rooms may have a positive effect
on Medicare census.
(Report and Recommendation, 25.)
{¶ 55} In Finding of Fact No. 14, the hearing examiner delineated the evidence put
forth by the applicant:
The Applicant offered testimony that the project is financially
feasible.  Specifically, Mr. Pumphrey testified that he reviewed
the Applicant's financial projections, originally prepared by
Mr. Corwin, and recommended changes to elements of the
projections that he felt to be unreasonable or uncompetitive.
These revisions included adjustments on the basis of changes
in the Medicaid reimbursement rate and reductions in the bed
tax rate.   He also recommended an upward adjustment in the
proposed private-pay rate to a figure he felt to be competitive.
Finally,  Mr.  Pumphrey  recommended  an  increase  in  the
proposed interest rate, based on the quote by the lender.   Mr.
Pumphrey stated that with his revisions, the project will have
positive cash flow even in the first year of operation, and
positive debt service coverage ratios.
(Report and Recommendation, 26.)
{¶ 56} The hearing examiner found that the applicant provided sufficient evidence
on the issue of financial feasibility.  In Finding of Fact No. 16, the hearing examiner found
that "[t]he evidence does not establish that the project is financially unfeasible.  While the
Objector presented evidence that elements of the financial projections are unreasonable,
the Applicant presented evidence justifying those estimates, including evidence that its
original figures were reviewed and revised."  (Report and Recommendation, 26-27.)
{¶ 57} According due deference to the hearing examiner's resolution of conflicting
evidence, we find there is reliable, probative, and substantial evidence to support the
determination of the hearing examiner and the director that the project is financially
feasible, and that appellant failed to establish that appellee did not comply with the
requirements of Ohio Adm.Code 3701-12-20(J).   Accordingly, the third assignment of
error is overruled.

No. 12AP-91                                                                        18
IV.  CONCLUSION
{¶ 58} Having overruled appellant's three assignments of error, we hereby affirm
the order of the director of ODH granting applicant's CON application.
Order affirmed.
FRENCH and CONNOR, JJ., concur.

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