Before Judges Pressler, Landau and Kimmelman.
The opinion of the court was delivered by: Landau, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Telephonically argued September 30, 1999
On appeal from the New Jersey Department of Health and Senior Services.
In these consolidated appeals, Helene Fuld Medical Center (Fuld) challenges a final determination by the Department of Health and Senior Services (Department), to the extent that it granted a Certificate of Need (CN) authorizing conversion of five open psychiatric beds *fn1 at respondent St. Francis Hospital (St. Francis), Trenton, to closed psychiatric beds servicing Mercer County, while allowing Fuld to convert only six of the eleven open beds it sought to be converted to closed status for Mercer County *fn2 .
The Factual and Regulatory Background
Pursuant to N.J.A.C. 8:33-4.1(a), the Department issued a call on May 2, 1994, published at 26 N.J.R. 1887, inviting proposals from acute care hospitals for a CN to convert underutilized beds to a category that would result in "bed increases" within the same hospital facility. The call was limited to several categories, including "acute psychiatric," and required that hospitals making a proposal must be currently licensed for the category and that the total number of beds for which the hospital was licensed may not be increased by reason of the proposed conversion. Underlying this call were statistical studies issued October 1 and November 9, 1993, (later revised September 8, 1994 and November 10, 1994) in which, as relevant to these appeals, the Department identified a surplus of open psychiatric beds totaling 74 in Mercer County, six in Hunterdon County and nine in Somerset County, while listing as unmet, the need for eleven closed beds in Mercer, one in Hunterdon, and five in Somerset.
At the time the parties responded to the 1994 call, Fuld had 24 open psychiatric beds, with a 73 percent occupancy rate and four closed psychiatric beds. St. Francis had twenty-four open psychiatric beds operating at 41.77 percent occupancy, and no closed beds. N.J.A.C. 8:33A-1.9 establishes 70 percent as the appropriate minimum occupancy rate for hospital psychiatric services.
Fuld applied to convert enough open beds to satisfy the entire unmet eleven closed bed need for Mercer County. It also applied to convert a bed to meet the one closed bed need in Hunterdon. St. Francis sought five of the closed Mercer County beds, and also asked to convert five beds in Somerset County to closed status, and for an additional bed to serve as a "back-up" in Hunterdon County.
Consistent with N.J.A.C. 8:33, the requests were submitted to the respective Mental Health Boards of the affected counties, and thereafter to the Local Advisory Board for Region IV (LAB IV).
On January 5, 1995, the Hunterdon County Mental Health Board considered the applications of St. Francis and Fuld with regard to the conversion of one bed. It decided to recommend the Fuld application.
On March 16, 1995, the applications of St. Francis and Fuld were considered by the Mercer County Health Board. The Mercer Board responded with a qualified endorsement of the Fuld request and an endorsement of the St. Francis request. It said, "[s]ince both proposals are in competition over a five(5) bed portion of a total requested conversion of eleven (11) such beds, these endorsements include the Board's explicit recommendation to [Helene Fuld] that it reduce its request for conversion of eleven (11) beds to six (6) to remain within the planned bed need. . . ."
On March 22, 1995, after reviewing the St. Francis application, the Somerset County Board recommended that St. Francis be permitted to convert to closed use, the five beds it sought in Somerset County.
Local Advisory Board IV voted unanimously to recommend the approval for conversion by St. Francis of five open beds to closed beds in Mercer County, as well as for a similar conversion of five beds to serve Somerset County. It also voted to recommend converting six open beds to closed beds at Fuld for Mercer County plus an additional bed for Hunterdon County. It cited as reasons: (1) opportunity for patient choice; (2) conversion of open beds to closed beds in St. Francis will raise the low occupancy rates of open beds at St. Francis; (3) the rate of admissions to State hospitals such as Trenton State Psychiatric Hospital will decrease as a result of additional closed beds (this is especially important with the proposed closing of Marlboro Hospital); (4) the closing of open beds at Fuld will raise the occupancy rates at St. Francis; (5) ...