Judges: ROBERT T. BENTON, II
Agency: Agency for Health Care Administration
Latest Update: Aug. 27, 1984
Summary: The issue in these proceedings is whether HRS should grant petitioners' application for a certificate of need to build a 100-bed general acute care hospital in Deltona, Florida. The parties have stipulated to the applicants' ability to staff the proposed facility and that no issue remains as to the criteria set forth in Section 381.494(6)(c)(3), (5), (6), (7), (10), (11), and , Florida Statutes (1983).Applicant had shown need for acute-care hospital within District 4 and transfer of beds from su
Summary: The issue in these proceedings is whether HRS should grant petitioners' application for a certificate of need to build a 100-bed general acute care hospital in Deltona, Florida. The parties have stipulated to the applicants' ability to staff the proposed facility and that no issue remains as to the criteria set forth in Section 381.494(6)(c)(3), (5), (6), (7), (10), (11), and , Florida Statutes (1983).Applicant had shown need for acute-care hospital within District 4 and transfer of beds from subdistrict 5 to subdistrict 4; Hearing Officer recommends that Department of Health and Rehabilitative Services (DHRS) grant petition.
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83-0160.PDFSTATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DAYTONA BEACH GENERAL HOSPITAL ) and SAXON GENERAL HOSPITAL, )
)
Petitioner, )
)
vs. ) CASE NO. 83-0160
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent, )
and )
)
CENTRAL FLORIDA REGIONAL )
HOSPITAL, )
)
Intervenor. )
)
RECOMMENDED ORDER
This matter came on for hearing in Deltona, Florida, before the Division of Administrative Hearings by its duly designated Hearing Officer, Robert T. Benton, II, on January 9, 1984. On that date, the hearing was continued until April 2, 1984. Final hearing concluded on April 4, 1984. The Division of Administrative Hearings received the transcript of proceedings on April 23, 1984. The parties are represented by counsel:
APPEARANCES
For Petitioner: F. Philip Blank, Esquire
241 East Virginia Street Tallahassee, Florida 32301
Ronald L. Book, Esquire
Sparber, Shevin, Shapo & Heilbroner 30th Floor AmeriFirst Building
One Southeast Third Avenue Miami, Florida 33131
For Respondent: James M. Barclay, Esquire
1317 Winewood Boulevard
Building 2, Suite 256
Tallahassee, Florida 32301
For Intervenor: Thomas A. Sheehan, III, Esquire
Jon C. Moyle, Esquire
Donna Stinson, Esquire, and Thomas M. Reason, Esquire, of Moyle, Jones & Flanigan
Post Office Box 3888
West Palm Beach, Florida 33402
By application dated October 11, 1982, petitioners sought a certificate of need for the construction of a 127-bed acute care hospital in Deltona, Florida. By letter dated November 8, 1982, petitioners reduced the proposal to 100 beds. On December 13, 1982, the Department of Health and Rehabilitative Services (HRS) issued a state agency action report proposing to deny not only petitioners' application but also four other applications for certificates of need to construct general acute care hospitals in the Deltona area.
Petitioners filed timely a petition for formal administrative hearing which HRS referred to the Division of Administrative Hearings. Three other applicants sought formal administrative hearings with respect to HRS' proposed denial of their applications, and the resulting administrative proceedings, HCA Health Services of Florida, Inc. (Deltona) v. Department of Health and Rehabilitative Services, No. 83-091, West Volusia Hospital Association v. Department of Health and Rehabilitative Services, No. 83-152, and Health Care Management Corporation d/b/a Four Townes Community Hospital v. Department of Health and Rehabilitative Services, No. 83-362, were consolidated with the present case.
One by one the other applicants abandoned their requests for formal hearings. After HCA Health Services of Florida, Inc., had taken a dismissal, Central Florida Regional Hospital of Sanford was granted leave to intervene, by order entered November 29, 1983, in opposition to the remaining applications.
Both HCA Health Services of Florida, Inc. and Central Florida Regional Hospital are owned by the Hospital Corporation of America (HCA). Petitioners' request for rehearing on the motion to intervene remains pending.
All parties furnished proposed findings of fact on May 8 and 9, 1984, which have been considered in preparation of the following findings of fact. Proposed findings have been adopted in substance, except where unsupported by the weight of the evidence, immaterial, cumulative or subordinate.
ISSUE
The issue in these proceedings is whether HRS should grant petitioners' application for a certificate of need to build a 100-bed general acute care hospital in Deltona, Florida. The parties have stipulated to the applicants' ability to staff the proposed facility and that no issue remains as to the criteria set forth in Section 381.494(6)(c)(3), (5), (6), (7), (10), (11), and
, Florida Statutes (1983).
FINDINGS OF FACT
Petitioners propose to "transfer" 100 beds from Daytona Beach General Hospital (DBGH) in Subdistrict 4 of District 4 to Deltona, which lies in Subdistrict 5 of District 4; and have agreed to "delicensure" of an additional
50 beds at DBGH (for a total of 150) if their application for a certificate of need (CON) to build in Deltona is granted. Saxon General Hospital, Inc. (Saxon) is a wholly owned subsidiary of Daytona Beach General Hospital, Inc., which operates DBGH.
HCA's Central Florida Regional Hospital (CFRH), is located outside of District 4 altogether in Sanford, which is in Seminole County. Baker, Clay, Duval, Flagler, Nassau, St. Johns and Volusia Counties make up HRS District 4, the domain of the Health Planning Council of Northeast Florida, Inc. District 4 as a whole has more hospital beds than it needs.
The present controversy concerns medical/surgical hospital beds in the two southern subdistricts of District 4, Subdistricts 4 and 5. Flagler County and Volusia County east of Little Haw Creek and Deep Creek comprise Subdistrict
4 of District 4. Deland, Deltona, Orange City and DeBary are in Subdistrict 5 of District 4, which is congruent with Volusia County west of Little Haw Creek and Deep Creek. See Appendix.
THE DISTRICT PLAN
The Health Planning Council of Northeast, Florida, Inc. has adopted a district health plan, Petitioner's Exhibit No. 6, but the plan has not been promulgated as a rule. HRS, but not CFRH, has admitted that petitioners' proposal is consistent with the district health plan. Among the policies stated in the plan is the following:
If the district as a whole has a surplus of acute care hospital beds but the subdistrict has a substantial shortage, or if beds are not available or accessible within 30 minutes travel time in an urban county or 45 minutes travel time in a rural county to at least 90 percent of the county's residents, the state should consider the need for more beds on a subdistrict basis. (Reference: Chapter
10-5.11(23)(i) of the Florida Administrative Code.)
Given the provisions as outlined above and so long as there is an overall surplus of hospital beds in the district, it is the policy of the Health Planning Council not to support approval of additional beds within a subdistrict until it can be clearly demonstrated by the circumstances that the number of beds needed in the subdistrict is substantial.
With respect to subdistrict five, the plan makes the following recommendation:
Within the framework of the most appropriate planning for the entire West Volusia-East Seminole County area, the State Office of Community Medical Facilities could give consideration to the transfer of acute care beds from within the district to the Deltona area--so long as the total number of licensed beds in the district does not increase. Any applicant to open hospital beds and other hospital services in Deltona should take into
consideration the general needs of the Deltona area population.
The Health Planning Council of Northeast Florida, Inc. adopted this recommendation with the specific purpose of declaring itself neutral as between then competing applications to build a hospital in Deltona.
BED NEED BY RULE
HRS has by rule specified a need for 195 medical/surgical, 18 intensive and cardiac care, ten obstetric and eight pediatric beds in Subdistrict 4 for the year 1988. Rule 10-16.005(1)(b) Petitioner's Exhibit No. 37, codified as Rule 10-17.005(1)(b), Florida Administrative Code. This represents 23 fewer medical/surgical beds than are presently licensed or authorized, but three more medical/surgical beds than are presently available in fact; the same number of intensive and coronary care beds as are presently available; two fewer obstetric and three fewer pediatric beds than are presently available in Subdistrict 5.
Excess capacity in Subdistrict 4 is even more pronounced, according to Rule 10-17.005(1)(b), Florida Administrative Code. This HRS rule specifies a need for 911 medical/surgical, 122 intensive and coronary care, 26 obstetric and
33 pediatric beds in Subdistrict 4 for the year 1988. These figures represent a projected excess of 254 medical/surgical, 14 intensive and cardiac care, four obstetric and 35 pediatric, licensed or approved beds for Subdistrict 4 in 1988, assuming no more beds are licensed, approved, delicensed or disapproved, in the interim.
BEDS IN PLACE
In District 4's Subdistrict 4, there are seven general acute care hospitals. Bunnell Community Hospital, with 81 licensed or approved beds, is the only hospital in Flagler County. The other six are clustered along the coast between Ormond Beach and New Smyrna Beach. Licensed and approved beds aggregate 1,165 medical/surgical, 136 intensive and cardiac care, 30 obstetric and 68 pediatric for Subdistrict4. Not all of these beds are actually available for occupancy, however. DBGH, for example, is licensed at 297 beds but had only
115 beds available for use on average between October 1, 1980, and September 30, 1981. (At the time of hearing, its average daily census was 50 patients.)
There are only two existing hospitals in District 4's Subdistrict 5, Fish Memorial Hospital (Fish) and West Volusia Memorial Hospital (West Volusia), both of which are located in or near Deland, an older population center in western Volusia County to the north of Deltona. West Volusia, which is further than Fish from the emerging Deltona-DeBary-Orange City population center in the southwestern part of the county, has 162 beds, of which 128 are medical/surgical; eleven are intensive or cardiac care; twelve are obstetric and eleven are pediatric. West Volusia had a 1983 average occupancy rate, based on
139 medical/surgical and intensive and coronary care beds, of 67 percent. During fiscal year 1981, most of West Volusia's admissions were of persons from Deland, but 22.34 percent of the total came from DeBary, Deltona and Orange City.
Fish has 97 licensed beds, but only 71 are available for use. Of these, 64 are medical/surgical, and the remaining seven beds are devoted to cardiac and intensive care. Fish's physical plant is older and in need of replacement or rehabilitation.
The Fish Memorial Hospital physical plant is a composite structure which is the result of three decades of renovation and add-on construction.
* * *
As a result, much of the facility does not comply with current building codes, the recommendations of the Joint Commission for Accreditation of Hospitals (JCAH) or current patient care management practices. An internal survey was begun to identify and quantify the extent of work necessary to bring the entire physical plant into compliance with all applicable codes or standards. The survey included all major components of the physical plant or hospital-wide systems that will have to be replaced or repaired within the next three year period just to maintain the current facility operations as a comparison to the replacement cost. The survey identified over thirty projects, ranging between $4,000 and
$1,500,000 each. Furthermore, these direct costs do not account for interruption of medical services to the community residents, nonproductive staff time due to phasing of renovation, and patient inconveniences during construction.
Intervenor's Exhibit No. 1., p.1.
Rehabilitation would involve direct costs of some $4,500,000.00. In July, August and September of 1980, Fish had 105 admissions of persons residing in the Deltona and DeBary-Orange City census division, or 22.9 percent of its total admissions. In the same months the year before 87 admissions or 23 percent of the total was attributable to the Deltona and DeBary-Orange City census divisions. The great majority of Fish's patients came from the Deland census division during both periods. Fish's 1983 average occupancy rate was 46.7 percent, but, at time of hearing, occupancy was at 80 percent.
Licensed at 226 beds, CFRH had about 200 beds staffed at the time of the hearing, including ten pediatric and nine obstetrical beds. (T. 592) CFRH's average occupancy was 72 percent for January and February of 1984, down from
76.9 percent for the same period last year. During the two months preceding the hearing, CFRH was on "red flag" status. No admissions were allowed, unless approved by the chief of staff; but no true emergencies were turned away. Some
34.8 percent of CFRH's admissions are of people who reside in the Deltona- DeBary-Orange City area or elsewhere in Volusia County. CFRH meets most of the need for medical/surgical beds attributable to the population in southwestern Volusia County. (Testimony of Scott) Most people living in the Deltona-DeBary- Orange City area who need hospitalization leave the county, in order to be admitted at intervenor CFRH.
ACCESSIBILITY
The evidence did not establish what proportion of the population of Subdistrict 5, if any, is further than 30 minutes' driving time from the nearest hospital at present, or what proportion would be in the future.
Petitioners' expert measured travel times from central points in DeBary, Orange City, Sanford and Deland to area hospitals and to the site proposed for a new hospital, with the following results:
West Volusia Fish Memorial Central Florida Proposed Memorial Hospital Regional Daytona Beach
TO: Hospital (Central (West Sanford) General (North Deland) (Saxon Blvd.
Deland) at 1-4)
(A) (B) (C) (D)
DeBary 32.2 26.4 18.2 14.9
Orange 28.6 22.8 26.3 17.7
City
Deltona 36.8 31.0 24.6 11.5
Sanford 51.6 44.9 17.1 33.7
Deland 20.7 14.9 41.7 32.6
In computing these averages, peak travel times were weighted equally with other travel times measured in December of 1983, and January and February of 1984.
One route to Sanford and CFRH from Deltona entails crossing a drawbridge. It takes Beverly Spitz "20 minutes just to get out of Deltona," with its winding roads and abundance of elderly drivers. Mary Lou Foster takes
29 to 45 minutes to drive from her Deltona home to CFRH. John Schmeltz can do it in "about 25 minutes." In February of 1982, When Mrs. Schmeltz passed out, the ambulance he summoned took 22 minutes to arrive. John Mosley made the drive from his Deltona home to CFRH in 25 minutes, but that was the night he thought his wife had had a heart attack and he "averaged over 100 miles an hour." (T.
204) "[A]t night . . . you realize just how far it is." (T. 211)
Clyde Mann's testimony to the effect that the remoteness of existing hospitals had cost lives went unchallenged. Mary Meade, a registered nurse, reported that the Deltona area "ha[s] lost several patients, several people" (T.
216) in the time it takes to get to a hospital. Bernie Levine, a public witness, testified that there were "constant people dying. They didn't make it to the hospital." (T. 210) A hospital in Deltona would significantly improve access for the people of Deltona, and would also improve access for residents of Orange City and DeBary, albeit less dramatically.
FINANCIAL FEASIBILITY
The parties stipulated that land is available for the project, and that projected construction costs are reasonable. Daytona Beach General Hospital, Inc. (DBGH, Inc.) plans to lend its subsidiary Saxon General Hospital, Inc. $4,159,700; and petitioners plan to borrow the remaining $12,569,000 necessary to build the hospital, at 13 percent, repayable over a 25 year period, with the new hospital serving as collateral.
DBGH, Inc. had "[a]pproximately one-million-three, one-million-four" (T. 245) on hand which could be devoted to construction of a new hospital in Deltona, at the time of hearing. The remaining "equity," $2,900,000 or so, is to be raised by sales of DBGH, Inc.'s common stock. Of the 2,000,000 shares of common stock authorized, Daytona Beach General Hospital, Inc. has issued 600,000. The hope is that additional shares can be issued and sold at $15 a
share, which is about five times as much as the stock is currently trading for over the counter. John E. Kaye and Jackson B. Bragg, the osteopaths who between them own 405,000 shares of DBGH, Inc. common, each plan to guarantee purchase of another $1,400,000 worth of DBGH, Inc. common stock, when it is issued.
The net worth statements of each man came in as exhibits at hearing, for the purpose of showing their supposed ability to honor such a guarantee. Aside from the DBGH, Inc. stock, however, neither man had sufficient net assets, and this assumes the accuracy of their financial statements, which listed as assets $253,000 in unsecured receivables of unstated age. Cars and boats were valued at cost, as was a pick-up truck ($3,000) while real estate was apparently valued at somebody's idea of market. Between them, the two doctors purport to have $150,000 worth of household furniture. For obvious reasons, no accountant's name appeared on these documents.
The doctors have an agreement between them to the effect that neither sells DBGH, Inc. stock unless the other also sells. Their unaudited statements put the value of DBGH, Inc. stock at $20 a share. A few days after the Daytona Beach News Journal reported that "HCA had lost the right to purchase Fish," (T.
264) Robert E. Hardison, Jr. of HCA spoke to Drs. Kaye and Bragg and told them "he realized it was futile to try to continue seeking a CON for Deltona adding new beds unless he could get some existing beds from [DBGH] and move them to Deltona." (T. 266) Mr. Hardison asked Drs. Bragg and Kaye what they would be willing to sell their stock for but did not offer to buy it. Shortly before the hearing they were offered $25 a share for all their holdings on condition the prospective buyer could arrange financing, and on condition that Saxon receive a certificate of need. This price is almost certainly higher than could be gotten in the market for shares which would not give the buyer a controlling interest in DBGH, Inc.
One Milton W. Pepper appeared at hearing and testified without contradiction that, in the event a certificate of need issued, he was willing and able to invest approximately $1,500,000 "in the beginning. . . and make arrangements for the additional $5,000,000 if necessary." Drs. Kaye and Bragg may lose control of the corporate petitioners in the process, but there is every reason to believe that money to build a hospital would be available.
After raising a quarter of the project cost, DBGH, Inc. proposes to lend that sum to Saxon, at one percent above prime. Although this arrangement would mean that the money was "debt" as between the subsidiary and its parent, outside financers would apparently treat the money as equity. Loy D. Deloney, an underwriter for Stephens, Inc., "the ninth-ranking investment banking firm in the country in terms of equity," knows "of at least 10 major financial institutions that would be interested in" providing long-term financing, if the CON issues.
The future holds many uncertainties for hospitals, but whether this money could be repaid and whether a new hospital would be otherwise feasible financially depends finally on how many patients it would serve.
POPULATION GROWTH FORECAST
The population of census tracts 908, 909, 910.02, 910.03 and 910.04, in which Deltona, Orange City and DeBary are located, is projected to increase by some 11,000 persons between 1984 and 1989, when the population in this part of southwestern Volusia County is expected to be 48,789. Of the projected 1989 population of census tracts 908, 909, 910.02, 910.03, 910.04, eleven thousand
one hundred twenty-four persons are expected to be over 65 and eleven thousand one hundred twenty-four persons are expected to be less than 65 but older than
Some three fifths of Deltona's present population (about 26,000) is over 55 years old.
EFFICIENT UTILIZATION LIKELY IN SUBDISTRICT
Even without the lure of a hospital, physicians have opened offices in southwest Volusia County. Seven specialists on the medical staff at CFRH have part-time practices in the Deltona-DeBary-Orange City area. A half dozen family practice physicians practice in the area full-time. They admit to hospital an average of 50 patients daily, 80 percent of them to CFRH.
Before HCA abandoned its application for a certificate of need to "transfer Fish's beds" and build a new 97-bed hospital in Deltona, it caused a health service study to be done by John Short & Associates. CFRH offered the study as evidence at hearing. Intervenor's Exhibit No. 1. The CFRH study looked at the western area of Volusia County, as a whole, including Deland, and concluded that 1987 would see 12,686 medical/surgical discharges of residents of western Volusia County. The CFRH study calculated the average length of a patient's stay in hospital at 7.03 days. CFRH's own evidence shows, therefore, that 89,183 medical/surgical patient days attributable to the population of the DeBary-Orange City, Deland and Deltona census districts can be expected in 1987.
CFRH's administrator, James D. Tesar, predicted that CFRH "could lose
80 percent of its admissions from the area including Deltona, Geneva, DeBary, Osteen, and Orange City," if Saxon built a new hospital in Deltona. In 1983, CFRH admissions from these Volusia County communities totalled 3,150. If a new hospital in Deltona did indeed change patient flow to the extent Mr. Tesar warns is possible, there would still be 630 admissions annually to CFRH of residents leaving southwest Volusia County for hospitalization.
If west Volusia Countians' admissions drop to 630 at CFRH, CFRH will be supplying only 4,429 patient days (630 X 7.03) to residents of West Volusia County. In that case, some 84,754 medical/surgical patient days will have to be accommodated in 1987 by hospitals within Subdistrict Five (or outside the subdistrict at hospitals other than CFRH). In 1987, to the extent patient days attributable to southwest Volusia County residents admitted to pediatric or obstetric beds at CFRH exceed patient days at CFRH attributable to Subdistrict Five residents living outside Deltona, Geneva, DeBary, Osteen and Orange City, 84,754 would be an understatement.
Dividing patient days by the number of days in a year (84,754/365) yields an average daily medical/surgical census of 232. Medical/surgical beds are put to good use when they are full 80 percent of the time, almost all health planners agree. In order to accommodate an average daily census of 232 at an 80 percent average occupancy rate, 290 medical/surgical beds will be needed as early as 1987. Only 192 medical/surgical beds are now open in Subdistrict Five. Chances are good that 292 hospital beds in Subdistrict Five could be used efficiently long before the spring of 1989.
IMPACT OUTSIDE SUBDISTRICT
A new 100-bed hospital in Deltona could operate consistently with efficient utilization of the medical/surgical beds already open in Subdistrict Five, even if the new hospital achieved 80 percent average occupancy as early as 1987 but only by diverting patients from CFRH. The effect on CFRH would be
significant, but temporary, since population growth would ensure its efficient utilization once again within two to four years of the 1986 opening of a 100-bed hospital in Deltona. All along, CFRH's loss of patients to a new Deltona hospital would be offset to some extent by ongoing population growth in Seminole County where CFRH is located. CFRH's own application for a certificate of need was granted on the theory that a new hospital of CFRH's size was needed just to serve the population of Seminole County. Petitioners' expert concluded that CFRH, Fish and West Volusia had had only 1,139 more medical/surgical patient days to split among themselves in 1983 than they could be expected to have in 1988, with a 100-bed hospital in its second year of operation in Deltona.
DBGH's surrender of the right to open 150 additional beds would have no immediate economic impact; the effect would be to reduce excess capacity in Subdistrict Four, but on paper only. No beds would be closed, no staff dismissed, no expenses pared. But, if petitioners' efforts to obtain a CON for a new hospital in Deltona fail, they intend to expend $10,000,000 for renovation of DBGH, a project for which they already have a CON. This would inevitably mean recovering additional costs from payers for hospital care in Subdistrict Four. Like the Deltona proposal, the renovation proposal contemplates some reduction in beds in Subdistrict Four, although fewer: "50-some-odd." (T. 293) The 150 bed reduction in approved beds in Subdistrict Four contemplated by the pending application would mean that, if and when new hospital beds are needed in Subdistrict Four, they could be added wherever they are needed rather than being added at DBGH whenever management decrees.
CONCLUSIONS OF LAW
Petitioners seek reconsideration of the order allowing CFRH to intervene, which was entered by the Hon. K. N. Ayers on November 29, 1983. In a workmen's compensation case, the Court discussed the propriety of a successor deputy commissioner's modifying an interlocutory order of his predecessor:
While a judge should hesitate to undo his own work, and should hesitate still more to undo the work of another judge, he does have, until final judgment, the power to do so and may therefore vacate or modify the interlocutory rulings or orders of his predecessor in the case. This "code" of restraint is not based solely on the law of the case but is founded upon considerations of comity and courtesy.
Tingle v. Dade County Board of County Commissioners, 245 So.2d 76, 78 (Fla. 1977). (footnote omitted).
In the present case there has been no appeal, so no law of the case has been established. See Airvac, Inc. v. Ranger Insurance Co., 330 So.2d 467 (Fla. 1976). The Tingle decision suggests that there is no significant difference between judges and executive branch adjudicatory officers, as far as the authority of a successor to reconsider a predecessor's ruling on an interlocutory matter.
Although the rule is otherwise with respect to final judgments or orders, see Groover v. Walker, 88 So.2d 312 (Fla. 1956), Boeing Co. v. Merchant,
397 So.2d 399 (Fla. 5th DCA 1981), the cases hold, with respect to interlocutory orders, that a successor adjudicator may, although he need not, revisit a ruling of his predecessor. Jones v. McConnon Co., 100 Fla. 1158, 130 So. 760 (1930)
(where successor judge overruled interlocutory order, the "ruling was made in both instances by the court having jurisdiction, and the fact that the judge presiding was not the same in each instance is immaterial" 130 So.2d at 761); Keathley v. Lawson, 348 So.2d 382 (Fla. 2d DCA 1977)(abuse of discretion not to revisit merits of predecessor judge's interlocutory order where result is to lull party past time for interlocutory appeal from original order). But see City of Miami Beach v. Chadderton, 306 So.2d 558 (Fla. 3d DCA 1975)(order arguably interlocutory in nature could not be disturbed by successor judge) and American Fire and Casualty Co. v. Tillberg, 199 So.2d 782 (Fla. 2d DCA 1967)("parties . . . had a right . . . to have the judge sitting on the case to decide the issues, without regard to how a previous judge had ruled . . ." 199 So.2d at 784).
There is no occasion in the present case "to undo the work of another" hearing officer. The hearing has concluded and nothing is to be gained from revisiting, at this juncture, the order allowing CFRH's intervention. On that basis, petitioners' request for rehearing on the motion to intervene is denied.
THE CRITERIA
The parties have by stipulation eliminated from consideration certain statutory criteria. There remain the following:
The need for the health care facilities and services and hospices being proposed in relation to the applicable district plan and state health plan adopted pursuant to Title XV of the Public Health Service Act, except in emergency circumstances which pose a threat to the public health.
The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospices in the service district of the applicant.
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4. The availability and adequacy of other health care facilities and services and hospices in the service district of the applicant, such as outpatient care and ambulatory or home care services, which may serve as alternatives for the health care facilities and services to be provided by the applicant.
* * *
The availability of resources, including funds for capital and operating expenditures, for project accomplishment and operation; the effects the project will have on clinical needs of health professional training programs in the service district; the extent to which the services will be accessible to schools for health professions in the service district for training purposes if such services are available in a limited number of facilities; the availability of alternative uses of such resources for the provision of other health
services; and the extent to which the proposed services will be accessible to all residents of the service district.
The immediate and long-term financial feasibility of the proposal.
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12. The probable impact of the proposed project on the costs of providing health services proposed by the applicant, upon consideration of factors including, but not limited to, the effects of competition on the supply of health services being proposed and the improvements or innovations in the financing and delivery of health services which foster competition and service to promote quality assurance and cost- effectiveness.
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(d) In cases of capital expenditure proposals for the provision of new health services to inpatients, the department shall also
reference each of the following in its findings of fact:
That less costly, more efficient, or more appropriate alternatives to such inpatient services are not available and the development of such alternatives has been studied and
found not practicable.
That existing inpatient facilities providing inpatient services similar to those proposed are being used in an appropriate and efficient manner.
In the case of new construction, that alternatives to new construction, for example, modernization or sharing arrangements, have been considered and have been implemented to the maximum extent practicable.
That patients will experience serious problems in obtaining inpatient care of the type proposed, in the absence of the proposed new service.
Section 381.494(6), Florida Statutes (1983).
The statute must be read with the gloss of Rule 10-5.11(23), Florida Administrative Code, which spells out an elaborate bed need methodology, but provides:
A favorable Certificate of Need determination may be made when the criteria, other than bed need, as provided for in Section 381.494(6)(c), Florida Statutes, demonstrate need. An unfavorable Certificate of Need determination may be made when a calculated bed need exists
but other criteria specified in Section 381.494(6)(c), Florida Statutes, are not met.
Rule 10-5.11(23)(b), Florida Administrative Code.
The rule addresses the issue of accessibility with this language:
Geographic Accessibility Considerations.
Acute care hospital beds should be available and accessible within an automobile travel time of 30 minutes under average travel conditions to at least 90 percent of the population residing in an urban area subdistrict.
Acute care hospital beds should be available and accessible within a maximum automobile travel time of 45 minutes under average travel conditions to at least 90 percent of the population residing in a rural area subdistrict.
If the number of beds allocated to a subdistrict for a given service pursuant to paragraph (e) substantially exceeds the number of existing and approved beds in that subdistrict for such service or the conditions set forth in subparagraph (1)1. or (i)2. are not satisfied, the Department shall consider the need for additional beds on a subdistrict basis in conjunction with the need for beds on the basis of the district as a whole and may approve such beds consistent with the provisions of paragraph (b).
Rule 10-5.11(23)(i), Florida Administrative Code.
The rule contemplates a balancing process in deciding whether to issue a CON for a new hospital. HRS is to "consider applications in context with all applicable statutory and rule criteria." Rule 10-5.11(23)(b), Florida Administrative Code.
NEED
There was no showing in this record that calculations in strict adherence to Rule 10-5.11(23)(f) et seq., Florida Administrative Code, would show a need for 100 more acute care hospital beds in Subdistrict Five or anywhere else in District Four. For one thing, Rule 10-5.11(23), Florida Administrative Code, contemplates maintenance of the status quo as far as patient flows in and out of District Four. The whole thrust of petitioners' case is that an established and growing population center should have a hospital of its own in order to avoid so many people having to leave the immediate vicinity for hospitalization outside the district. This would inevitably change patient outflow in a way not contemplated by the bed need methodology adopted in Rule 10-5.11(23), Florida Administrative Code. Even so, HRS has admitted that petitioners' proposal conforms to Rule 10-5.11(23), Florida Administrative Code, because it would entail a reduction of approved beds in District Four. For the same reason, and because hospital beds would be placed in Deltona that are now
allocated to a subdistrict with substantial excess capacity, the proposal conforms to the District Plan.
The proof did not show an access problem within the meaning of Rule 10-5.11(23), Florida Administrative Code. Even though it is outside the district, CFP is within 30 minutes' average driving time of Deltona, 24.6 minutes by petitioners' expert's calculations. Hospitals in HRS District Four are further away than 30 minutes' average driving time, however; thus there was no showing of "accessibility [within 30 minutes] . . . of like and existing health care services . . . in the service district of the applicant." Section
381.494(6)(c)(2), Florida Statutes (1983)(emphasis supplied). The configuration here is not of scattered residents on the fringe of any logical service area.
The evidence showed, instead, a rapidly growing community of 26,000 persons without a hospital even though its population is, on average, older than the norm.
The weight of the evidence established that a 100-bed hospital in Deltona would be a sound business proposition. It is impossible to forecast with precision what effect the new medicare regulations will have, to what extent average lengths of stay will decrease and what the effect of outpatient surgery centers may be, among other things. But it is clear that a new 100-bed hospital could be operated efficiently and profitably in Deltona.
It is also clear that a hospital in Deltona would take patients and revenues from CFRH. Since CFRH would experience a dip in admissions, and so have fewer patients from whom to recover fixed costs, it would have either to suffer a dip in profits or raise rates. The policy question here is whether the possibility of rate hikes at CFRH outweighs the advantages of a new hospital in the center of a large and growing retirement community. Petitioners efforts to show that CFRH's rates would decrease if Saxon is built in Deltona, because of the competition CFRH would then face, were unsuccessful. A rise in rates would affect Subdistrict Five residents since CFRH will continue to serve some Volusia Countians. For one thing, the new hospital would not have pediatric or obstetric beds.
At the time of hearing CFRH and Fish were "being used in an appropriate and efficient manner." Section 381.494 (6)(d)(2), Florida Statutes (1983). West Volusia's 67 percent medical/surgical average occupancy rate for 1983 reflect inefficient utilization' there, but West Volusia is 36.8 minutes' average driving time from Deltona, and the evidence did not show that a new hospital in Deltona would affect utilization at West Volusia significantly. Section 381.494(6)(d), Florida Statutes (1983), makes clear that "new health services to inpatients" and specifically "new construction" are to be approved only after careful consideration of the alternatives. In the posture of the present case, the alternative to petitioners' proposal for Subdistrict Five, is the status quo: The residents of Deltona and environs, many of whom are elderly, leaving the district for a hospital in another community an average
24.6 minutes' driving time distant. The present situation entails "serious problems in obtaining inpatient care," Section 381.494(6)(d)(4), Florida Statutes (1983).
RECOMMENDATION
Upon consideration of the foregoing, it is RECOMMENDED:
That HRS grant petitioners' application for a certificate of need to construct a 100-bed acute care general hospital in Deltona.
DONE and ENTERED this 9th day of July, 1984, in Tallahassee, Florida.
ROBERT T. BENTON II
Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32301
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 9th day of July, 1984.
APPENDIX *
* NOTE: APPENDIX to this Recommended Order is a map which is available for review in the Division's Clerk's Office.
COPIES FURNISHED:
F. Philip Blank, Esquire
241 East Virginia Street Tallahassee, Florida 32301
Ronald L. Book, Esquire
Sparber, Shevin, Shapo & Heilbroner 30th Floor AmeriFirst Building
One Southeast Third Avenue Miami, Florida 33131
James M. Barclay, Esquire 1317 Winewood Blvd.
Building 2, Suite 256
Tallahassee, Florida 32301
Thomas A. Sheehan, III, Esquire Jon C. Moyle, Esquire
Donna Stinson, Esquire, and Thomas M. Beason, Esquire, of Moyle, Jones & Flanigan
Post Office Box 3888
West Palm Beach, Florida 33402
David Pingree, Secretary Department of HRS
1323 Winewood Blvd.
Tallahassee, Florida 32301
Docket for Case No: 83-000160CON
Orders for Case No: 83-000160CON
| Issue Date |
Document |
Summary |
|
Aug. 23, 1984 |
Agency Final Order
|
|
|
Jul. 10, 1984 |
Recommended Order
|
Applicant had shown need for acute-care hospital within District 4 and transfer of beds from subdistrict 5 to subdistrict 4; Hearing Officer recommends that Department of Health and Rehabilitative Services (DHRS) grant petition.
|
