STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
UNIVERSITY COMMUNITY HOSPITAL, )
)
Petitioner, )
)
vs. ) CASE NO. 83-0161
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent, )
and )
)
TAMPA GENERAL HOSPITAL, )
)
Intervenor. )
)
RECOMMENDED ORDER
On October 31, 1983, through November 4, 1983, this case was heard by Sharyn L. Smith, Hearing Officer, Division of Administrative Hearings, in Tallahassee, Florida. The following appearances were entered:
APPEARANCES
For Petitioner: Alan C. Sundberg, Esquire
Cynthia S. Tunnicliff, Esquire George N. Meros, Jr., Esquire
CARLTON FIELDS WARD EMMANUEL SMITH & CUTLER
Post Office Drawer 190 Tallahassee, Florida 32301
For Respondent: James M. Barclay, Esquire
Building Two, Suite 256 1321 Winewood Boulevard
Tallahassee, Florida 32301
For Intervenor: E. G. Boone, Esquire
Robert T. Klingbeil, Jr., Esquire
G. BOONE, P.A. 1001 Avenida del Circo Post Office Box 1596
Venice, Florida 34284
At the final hearing, Dennis Pupello, M.D., a cardiovascular surgeon in Tampa, Florida; Dean Mason, M.D., Director of the Western Heart Institute, San Francisco, California, who was accepted as an expert in cardiology and cardiovascular disease; James Jude, M.D., a cardiovascular surgeon in Miami, Florida, who was accepted as an expert in cardiac surgery; Eugene Dewell, Senior Vice President and Chief Fiscal Officer of Petitioner University Community Hospital; Marvin Feldbush, Vice President, Fiscal Affairs of Petitioner
University Community Hospital; Jorge Otero, M.D., cardiologist in Tampa, Florida; George Britton, Vice President of Operations, Petitioner University Community Hospital; and Warren Dacus, D.B.A., a Hospital Planning and Management Consultant In McLean, Virginia, who was accepted as an expert in health care planning, health care finance, facilities planning and health care facilities construction management, testified for the Petitioner.
Petitioner's Exhibits 1-21 were offered into evidence. 1/ All were admitted into evidence with the exception of Petitioner's Exhibit 7 on which ruling was reserved. Following the hearing, the Petitioner requested that the record be supplemented to include the Department of Health and Rehabilitative Services Report and Recommendation concerning the application of Tampa Heart Institute. The Intervenor filed a response in opposition to the motion. Having considered the Petitioner's request and Intervenor's response, it is concluded that the Petitioner's Motion is appropriate and should be granted. The Department's report is hereby admitted as Petitioner's Exhibit 24.
Thomas Porter, a Health Planner with the Department of Health and Rehabilitative Services, who was accepted as an expert in health planning, testified for the Respondent. Respondent's Exhibit 1 was offered and admitted into evidence.
Intervenor Tampa General Hospital presented the following witnesses: Dr. Vijayanadar, a cardiac surgeon in Tampa, Florida, who was accepted as an expert in cardiac surgery; Ed Perrine, Executive Director of the Health Council for Hillsborough-Manatee Counties who was accepted as an expert in health planning; Barbara Myres-Fernandez, Vice president for Planning and Marketing, St. Joseph's Hospital, Tampa, Florida, who was accepted as an expert in hospital health planning; Pam Erb, Executive Director of Nursing Services at Tampa General Hospital, who was accepted as an expert in hospital nursing administration; Thomas Bartley, M.D., a cardiovascular surgeon in Gainesville, Florida, who was accepted as an expert in cardiovascular surgery, Eugene Nelson, Administrator of the Office of Community Facilities, Department of Health and Rehabilitative Services, who was accepted as an expert in health care planning; Edward Houck, Assistant Administrator of Memorial Hospital in Sarasota, Florida, who was accepted as an expert in health planning; Stanley Smith, Director of the Population Program, Bureau of Economic and Business Research, University of Florida, who was accepted as an expert in construction cost estimation, and construction management; Thomas Konrad, Health Care Facilities Consultant in Tallahassee, Florida, who was accepted as an expert in health care planning; Lawrence Margolis, a Project Director with Herman Smith Associates, Hinsdale, Illinois, who was accepted as an expert in health care planning and hospital administration; Peter Lallos, Vice President of E. F. Hutton, New York, New York, who was accepted as an expert in hospital financing; Woodrin Grossman, a Certified Public Accountant, Price-Waterhouse, Tampa, Florida, who was accepted as an expert in financial feasibility studies, certificate of need financial feasibility studies and financial and accounting analysis; and Julian Rice, Executive Director of the Hillsborough County Hospital Authority, who was accepted as an expert in accounting.
Intervenor Tampa General Hospital Exhibits 1-7 were offered and admitted into evidence.
Official recognition was taken of Rules 10-5.11(15) and (16), Florida Administrative Code.
Proposed Recommended Orders containing findings of fact have been submitted by the parties and considered in the preparation of this Recommended Order.
When the parties' findings of fact were consistent with the weight of the credible evidence introduced at final hearing, they were adopted and are reflected in this Recommended Order. To the extent that the findings were not consistent with the weight of the credible evidence, they have been either rejected, or when possible, modified to conform to the evidence. Additionally, proposed findings which were subordinate, cumulative, immaterial or unnecessary have not been adopted.
ISSUE
Whether the Petitioner University Community Hospital's certificate of need application to establish a cardiac catheterization laboratory and open heart program in Tampa, Florida, should be approved.
FINDINGS OF FACT
On August 11, 1982, the Petitioner University Community Hospital, a non-profit hospital, (hereafter Petitioner or UCH) filed an application for a certificate of need (hereafter CON) to expend some $934,000 to establish cardiac catheterization and open heart surgical services at its 404 bed facility located at 3100 East Fletcher Avenue, on the north side of Tampa, approximately 9 miles from the Intervenor Tampa General Hospital (hereafter TGH or Tampa General).
Petitioner's CON application was reviewed by the Respondent Department of Health and Rehabilitative Services (hereafter Respondent or Department) under Rule 10-5.11, Florida Administrative Code, and compared with other facilities in the Health Systems Agency, Region IV, which consisted of Pasco, Pinellas, Manatee and Hillsborough Counties. On November 30, 1982, the Department denied the Petitioner's application.
The basis for the Department's denial as reflected in the State Agency Action Report, was that two hospitals in Health Services Area IV, Medical Center and Morton Plant, were below the 350 open heart procedures threshold required by Rule 10-5.11(16), Florida Administrative Code. Since Petitioner was not entitled to a CON for open heart surgery, it was not entitled to a CON for cardiac catheterization because Rule 10-5.11(15), Florida Administrative Code, which was in existence when Petitioner's application was reviewed, required that an applicant for cardiac catheterization must be able to offer open heart surgery.
Following the Department's denial of Petitioner's application and prior to the final hearing, the Legislature abolished the Health Systems Agency Regions and provided instead that health planning be based on HRS Districts.
Intervenor TGH, a 611 bed public hospital located on Davis Island in downtown Tampa, in the same service area as the Petitioner, and presently offering cardiac catheterization and open heart surgical services, intervened in this proceeding on the side of the Department.
The Need for Cardiac Catheterization Services In the Service District
Prior to the final hearing, the Department admitted to the need for an additional cardiac catheterization laboratory in Hillsborough and Manatee counties. See Petitioner's Exhibit 17.
There are presently three adult cardiac catheterization labs in Hillsborough-Manatee, two at TGH and one at St. Joseph's Hospital. In the five- county area, Lakeland Regional has an approved and existing program for a total of four programs.
Applying the methodology set forth in Rule 10-5.11(15), Florida Administrative Code, the Petitioner has established that a need exists for at least one additional cardiac catheterization lab regardless of whether the service district is defined to include two or five counties. As projected and calculated by Thomas Porter, a Department witness who utilized the rule methodology, five catheterization labs are need in the five-county area by the year 1985. However, based on historical data, the need formulated pursuant to the rule is probably understated.
Porter's testimony was confirmed by Dr. Warren Dacus, a hospital planning consultant, who after obtaining population and projection figures from the Department and the University of Florida, Bureau of Business and Economic Research, concluded that a need existed for one additional catheterization lab in 1985 in Hillsborough and Manatee Counties.
On June 16, 1983, the Department approved a CON application filed by Tampa Heart Institute (hereafter THI) which authorized the establishment of three cardiac catheterization labs. The Department's proposed agency action to award a CON to THI was challenged by the Intervenor Tampa General and St. Joseph's Hospital and is presently the subject of a pending administrative proceeding.
The CON granted to THI was based on the Department's assumption that most, if not all, of its patients would come from Latin America. THI's CON application presented a unique set of circumstances which fell outside the methodology normally considered during CON reviews.
Since the CON proposed to be granted to THI was administratively challenged and was based on the assumption that patients would be drawn from outside any defined service district, it is logically inconsistent and legally inappropriate to consider THI's three cardiac catheterization labs in the instant proceeding.
If the CON is granted to the Petitioner, there will be sufficient utilization of the cardiac catheterization laboratory to insure quality of services as required by Rule 10-5.11(15)(i), Florida Administrative Code. Based on previous referrals to other hospitals and historical data obtained from other hospitals in the district, the Petitioner can expect to perform in excess of 300 cardiac catheterization procedures annually for the next three years following initiation of the service.
The Need for an Open Heart Surgical Program in the Service District
In the Hillsborough-Manatee Service District, two open heart programs presently exist, one program is located at St. Joseph's Hospital, the other is at Tampa General.
The formula found at Rule 10-5.11(16), Florida Administrative Code, provides that the number of open heart procedures projected to be done in a future year is determined by multiplying the number of procedures per 100,000 population performed in the service area in 1981 by the projected population in the service area in the future year. No additional programs will normally be approved if such program will reduce the volume of an existing program below 350 surgery cases.
In the service distract represented by the two-county area, there is a need for four open heart surgical programs by 1985. Using the methodology found at Rule 10-5.11(16), Florida Administrative Code, the two-county area requires the capacity to perform 1,433 open heart surgeries in 1985, which establishes a need for four programs.
Although the addition of an open heart program at UCH would draw certain patients from both St. Joseph's and Tampa General, the number of open heart surgeries performed at St. Joseph's and Tampa General would not fall below
350 per year if UCH were granted a CON.
In the five-county area which includes Hillsborough, Manatee, Polk, Highlands and Hardee counties, 1,587 open heart surgical procedures are projected for 1984 and 1,623 for 1985. Applying the rule methodology a need exists for five open heart programs in 1984 and 1985. Three programs, Tampa General, St. Joseph's and Lakeland Memorial Medical Center, presently exist or are approved in the five-county area.
The petitioner has demonstrated a sufficient projected volume of open heart surgeries to assure quality of service under Rule 10-5.11(16)(e)(4), Florida Administrative Code. UCH can expect to perform in excess of 200 adult open heart surgical procedures during its first year of operation and within three years after initiation of the service. Moreover, UCH's surgery program will be capable of providing 500 open heart operations per year.
In 1981, Lakeland Memorial performed 81 open heart surgical procedures which is significantly below the 350 procedures required by the rule. UCH's proposed program would have little if any effect on the open heart program at Lakeland Memorial, or its ability to meet minimum service levels now or in the foreseeable future. The 350 procedures per year threshold is required to ensure that cardiac surgery teams and staff remain proficient so that patient care is not jeopardized. If, due to the low number of procedures performed at Lakeland Memorial, patient care is being jeopardized, the purpose of the rule is not served by denying a CON to the Petitioner on such a basis since the grant or denial of the instant CON would have no effect on Lakeland Memorial's ability to meet the threshold.
UCH's non-invasive coronary procedures including echocardiograms, stress testing and halter monitoring have been utilized by patients to a noteworthy degree. The levels of utilization for these non-invasive tests at UGH in comparison to Tampa General and St. Joseph's are as follows for the period July, 1980 to June, 1981: echocardiogram, UCH 1021, Tampa General 1,175, St. Joseph's 539; stress testing, UCH 598, Tampa General 490, St. Joseph's 371; halter monitoring, UCH 618, Tampa General 328, and St. Joseph's 290.
A direct relationship exists between the volume of non-invasive coronary procedures and invasive catheterization procedures that can be expected to be performed at UCH. Approximately 30 percent of the patients at UCH are
referred to other hospitals for invasive procedures following non-invasive testing. Transferring patients between hospitals for invasive procedures after non-invasive testing lessens the quality of patient care and increases the probability of duplication of testing, thus increasing health care costs.
The Adequacy of she Petitioner's Proposed Facility
UCH's proposed facilities for open heart and cardiac catheterization services are adequate for their intended purposes.
The proposed plans and equipment lists for the cardiac catheterization lab and open heart surgical program are acceptable from a medical and planning perspective, and are similar to other facilities offering such services.
UCH has or if the CON is approved will have, the necessary staff and equipment to meet the requirements of Rules 10-5.11(15)(g) and 10-5.11(16)(c), Florida Administrative Code. The Petitioner will provide the training programs set forth at Rule 10-5.11 (15)(i)(3), Florida Administrative Code.
The catheterization lab will maintain the hours of operation specified in Rule 10-5 11 (15)(h)(2), Florida Administrative Code, and the open heart surgery program will operate in accordance with the requirements of Rule 10- 5.11(16)(d)(2) and (3), Florida Administrative Code.
The Petitioner is accredited by the Joint Commission on Accreditation of Hospitals as required by Rules 10-5.11 (15)(i)(1) and 10-5.11 (16)(e)(1), Florida Administrative Code.
The Petitioner has a written plan projecting case loads, and projecting space, support, equipment and supply needs as required by Rule 10- 5.11(16)(e)(5), Florida Administrative Code.
The Financial Feasibility of the Petitioner's Proposed
Cardiac Program
UCH's proposed open heart surgery program and cardiac catheterization lab are financially feasible. Funds for the project are available and no long term debt exists since the projects are to be funded out of cash. Projected net income from the service is in the 5 percent range which is conservative for a not-for-profit hospital which requires a degree of profitability to ensure that sufficient revenue is generated to meet expenses.
The projected costs for the proposed cardiac catheterization lab are reasonable. The proposed renovation of the lab is part of a general large scale renovation for which UCH has secured a binding contract for the amount specified in the application. The equipment and personnel budget for the lab is also reasonable.
Based upon a comparison of the proposed charges at UCH with the projected 1984 charges at Tampa General, UCH offers the least costly alternative for providing cardiac catheterization and open heart surgery services. For example, at Tampa General, the projected charge for cardiac surgery, exclusive of charges for room and ancillary services, is $1,711 compared to $1,244.81 at UCH. For cardiac catheterization, the projected 1984 charge at Tampa General is
$1,338 as compared to $1,093.75 at UCH.
The Petitioner's charges and proposed charges for cardiac catheterization, open heart surgery and other hospital services are comparable to other similar hospitals in the service district, and accordingly, the Petitioner has established that the requirements of Rules 10-5.11(15)(j) and 10- 5.11(16)(f)(2), Florida Administrative Code have been met.
Petitioner's Proposed Cardiac Program and its Effect on
Tampa General
The Hillsborough County Hospital Authority, a public agency which was created by special act of the Legislature, see Chapters 67-1498 and 80-510, Laws of Florida, is required by law to treat indigent patients who are in need of immediate or emergency medical treatment. Hillsborough County is required to reimburse the Hospital Board of Trustees for the full cost 2/ of any hospital or related services provided patients properly certified as indigent.
Tampa General has experienced severe monetary problems as a result of its role as provider of free medical care to indigent residents of Hillsborough County. Unfunded patients have averaged 80-100 admissions per week at a cost of
$280,000-$350,000 per week to the hospital. Approximately 30 percent of the claims that the hospital files with Hillsborough County for reimbursement of indigent expenses are rejected. As a result, Tampa General has been forced to subsidize its cost of providing indigent care through added charges passed on to paying patients. Since the Hospital Authority has no taxing power, Tampa General is dependent upon funds provided by the County. Among public hospitals in Florida's major urban areas, Tampa General receives the least amount of financial assistance from local government.
Tampa General has budgeted $24 million worth of free care for 1984 and this amount is projected to increase through 1988. The amount of free care provided to indigents at Tampa General is approximately 16 percent of gross revenues.
Tampa General utilizes the profits it derives from the operation of its cardiac programs to subsidize the considerable amount of free care that it provides to indigent residents of Hillsborough County.
In 1981, Tampa General embarked on an ambitious expansion program in order to attract additional paying patients and to remain competitive with other private hospitals in the community.
In order to finance this project, the Authority issued bonds in the amount of $160,260,000. In deciding to issue these bonds, the Authority considered the revenues generated by the hospital's cardiac programs which constitute 17-18 percent of total net revenues and the relative lack of competition from other coronary programs in the Hillsborough area.
In the absence of adequate funding by the State and/or County, Tampa General's cardiac program is an essential element in the hospital's plan to continue to provide free care to indigents. The subsidization or contribution margin of the cardiac program helps offset the bad debt of indigent costs which are not being reimbursed by local government.
The amount of subsidization or contribution margin for each cardiac procedure performed at Tampa General in 1984 was $3,721 and is projected to increase to nearly $5,700 in 1988.
However, notwithstanding the monies projected by Tampa General which it expects to be contributed by its cardiac program, it is likely that third- party payers will follow the federal government in adopting a prospective payment system based on diagnosis related groups of illnesses which will limit the amount of revenues which can be collected from private pay patients. Assuming that this occurs, the amount of subsidization derived from cardiac programs at Tampa General will be significantly decreased regardless of the outcome of the instant proceeding.
The evidence regarding the effect of UCH's proposed cardiac program on Tampa General's existing program is unclear. Unquestionably, some of the patients which would have gone to Tampa General for cardiac care will go to UCH if its program is established. However, since cardiac catheterizations are increasing in volume and a direct relationship exists between cardiac catheterizations and open heart surgery, it can be concluded that while Tampa General's rate of growth would decrease, it is unclear whether its present volume would decrease significantly below existing levels. No evidence was presented that Tampa General's cardiac catheterization and open heart programs would decline below the thresholds established by rule if UCH's application were granted.
The financial problems facing Tampa General are clearly serious. The hospital has taken drastic steps to attempt to control costs including eliminating staff positions and severely restricting indigent access to health care. Tampa General's problems existed prior to UCH's application for a CON and will likely continue regardless of whether the Petitioner's CON is approved.
The long-term solution of Tampa General's financial problems should not be dependent upon whether UCH prevails in this proceeding. If Tampa General is to fulfill its mission as a public hospital, it must be assured of reliable and consistent course of funding for all of its operations. In enacting Chapter 80-510, Laws of Florida, the Legislature intended that the cost of indigent hospital care in Hillsborough County be borne by all of the citizens of the County, and not primarily by paying patients who by circumstance or otherwise, find themselves at Tampa General.
Tampa General's reliance on its cardiac programs to finance its long- term debt and offset its indigent care losses is dependent on the existence of two factors: first, Tampa General must maintain what is essentially a monopoly on the services to be guaranteed a supply of paying cardiac patients and second, it must have the ability to pass on to its paying cardiac patients the amount needed to subsidize its other operations. Tampa General, however, no longer maintains a monopoly on cardiac programs in the Hillsborough area as evidenced by the certificate of need awarded to St. Joseph's. Moreover, the Department has stated its intention to authorize another open heart program and three catheterization labs at Tampa Heart Institute. The prospective reimbursement system implemented by the federal government which is expected to be followed by private insurers will further limit Tampa General's ability to generate excess revenues from private-pay coronary patients.
The result of the inability of Tampa General to secure a long-term solution to its problems of unreimbursed indigent care is reflected in the institution of a policy limiting indigent admissions to the most serious cases.
Due to this new policy limiting admissions at Tampa General to emergencies, Tampa General's and UCH's policies regarding coronary care for indigents are essentially the same.
The Petitioner's Compliance with Section 381.494(6)(c),
Florida Statutes
It was uncontroverted that UCH's proposed cardiac services are consistent with the state health plan. Since the Department has not yet promulgated as a rule the health systems' plan for the District, the parties agree that the question of the Petitioner's compliance with the local plan is not an issue in this case. See Section 381.494(6)(c)(1), Florida Statutes.
The proposed cardiac program has been approved by UCH's Board of Directors, and is an appropriate progression considering the size of UCH and the mix of cardiologists and patients at the facility. See Rule 10-5.11(2), Florida Administrative Code.
The Petitioner has carried its burden by demonstrating a need for cardiac catheterization and open heart surgical services regardless of whether the service district is defined as a two or five-county area. See Section
381.494 (6)(c)(2), Florida Statutes.
Utilizing a two-county area including Hillsborough and Manatee counties, the projected population in 1985 is 890,000. The 1981 use rate was
276.4 cardiac catheterization procedures per 100,000 population. Multiplying the 1981 use rate by the projected population, 2,640 catheterization procedures are projected for 1985. Dividing 2,460 by the threshold number 600, results in a need for 4.1 catheterization labs in Hillsborough and Manatee counties in 1985. Presently, three existing and approved catheterization laboratories exist in Hillsborough and Manatee counties, one at St. Joseph's and two at Tampa General. A need, therefore, exists for an additional catheterization laboratory in the two-county area. 3/
In the five-county area which includes Hillsborough, Manatee, Polk, Hardee and Highlands counties, the projected population for 1985 is 1,330,400. The 1981 use rate was 207 procedures per 100,000 population. A total of 2,693 and 2,754 procedures are projected for 1984 and 1985, respectively. Dividing 2,754 by 600 demonstrates a need in 1985 for five laboratories while four presently exist or are approved in the five-county area, one at St. Joseph's, two at Tampa General and one at Lakeland Memorial. Petitioner has therefore demonstrated a need for an additional cardiac catheterization services in the five-county area.
In considering the need for open heart surgery services in the two- county area and utilizing the projected population of 890,000 and a use rate of 160.99, the projected number of open heart procedures in 1985 is 1,433. When 1,433 is divided by 350, a need exists for four open heart surgery programs in Hillsborough and Manatee counties in 1985. Since there are only two existing and approved programs in the two-county area, the Petitioner has demonstrated a need for two additional open heart surgical programs by 1985.
In the five-county area, the projected 1985 population is 1,330,400. The 1981 use rate was 122 procedures per 100,000 population. Multiplying the projected population by the use rate results in 1,623 open heart procedures projected in 1985. When 1,623 is divided by 350, a need is established for five
open heart surgical programs by 1985. Since only three existing or approved programs are in place, the Petitioner has demonstrated a need for two additional open heart programs in the five-county area by 1985.
The Petitioner presently performs a significant number of non-invasive cardiac procedures. It was uncontroverted that UCH provides quality of care to its patients. If the Petitioner's application is approved, it can be assumed that present acceptable quality of care standards will be met in the operation of the program. See Section 381.494(6)(c)(3), Florida Statutes.
The proposed project is financially feasible, and UCH has the ability to attract sufficient nurses and support staff to operate both programs. See Section 381.494(6)(c)(8) and (9), Florida Statutes.
The Petitioner has argued throughout this proceeding that the initiation of cardiac service at its facility will foster competition thereby reducing health care costs in Hillsborough County. If price competition in fact existed under the present system of health care delivery, lower costs would be expected. However, with rare exception, health care consumers do not select hospitals nor do they pay their own hospital bills. Rather, third-party payers, including the federal government and private insurance companies, are responsible for reimbursing hospitals for patient costs and physicians generally determine which hospital is utilized by a patient.
In an understandable effort to control health care costs, the federal government and the state have enacted a complex regulatory scheme for health care providers which limits competition and places the burden on providers of establishing that a need exists in a given area for a proposed service. To a significant extent, this scheme protects the financial interests of existing providers. This process can have an unfortunate side-effect of limiting the choices available to health care consumers and eventually could result in a diminished quality of health care. 4/
While the presence of additional hospitals in an area does not necessarily result in lower health care costs, it does create potential competition for patients through physician referrals. Hospitals have an incentive to provide quality care including state of the art equipment and competent staff, to ensure that they attract their share of patients. As a result, the preferences of physicians and health care consumers should have a greater impact in an area where health care services exist at more than one facility. The difficulty encountered in CON proceedings is attempting to balance the legitimate needs of health care consumers with the state's efforts to control costs by discouraging the duplication of unnecessary services.
The Petitioner has demonstrated that its proposal is cost-effective, and should foster innovation and improvement in the delivery of health services in the service area as required by Section 381.494(6)(c)(12), Florida Statutes. The assertion by Tampa General that the expansion of its facility represents a less costly alternative is too speculative to be considered in this proceeding. While TGH is in the process of a $300,000 conversion of a pediatric catheterization lab to an adult lab, this fact was apparently either unknown or not considered by the Department at the time of the final hearing since HRS witnesses stated that Tampa General has only two adult labs.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding. Section 120.57(1), Florida Statutes.
Section 381.494(6)(c), Florida Statutes, requires the Department to review applications in the context of the following relevant criteria:
The need for the health care facilities and services and hospices being proposed in relation to the applicable health systems plan, annual implementation 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 applicant's health service area.
The availability and adequacy of other health care facilities and services and hospices in the applicant's health service area, 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.
Probable economies and improvements in service that may be derived from operation of joint, cooperative, or shared health care resources.
The need in the applicant's health service area for special equipment and services which are not reasonably and economically accessible in adjoining areas.
* * *
The immediate and long-term financial feasibility of the proposal.
The special needs and circumstances of health maintenance organizations.
* * *
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.
The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of
alternative, less costly, or more effective methods of construction.
Rules 10-5.11(15), relating to cardiac catheterization laboratories and (16), relating to open heart surgery programs, implement these statutory provisions and establish methodologies to determine need for such facilities in addition to other requirements.
The legal issues which must be determined in this case include (1) whether the Petitioner's service district encompasses a two or five-county area;
whether the Department's proposed approval of THI's application should be considered approved in this proceeding; (3) whether Tampa General has established that its substantial interests would be affected by the approval of Petitioner's application; and (4) whether the Petitioner has established by a preponderance of the evidence that its application for a CON should be granted.
Petitioner's Service District
Rule 10-5.11(15)(e), Florida Administrative Code, defines a service area for purposes of cardiac catheterization as ". . .an HRS service district." The Department's rule relating to open heart surgery, Rule 10-5.11(16)(a), Florida Administrative Code, refers to service areas but does not provide a definition for the term. Section 381.494(5), Florida Statutes, requires the Department to provide by rule for, inter alia, competitive review of competing applications in the same service district. Also see Section 381.494(6)(c)(1), (4), (6), (8), Florida Statutes, which require Department review of an application to be focused on the applicant's service district. The Department is required by Section 20.19(4), Florida Statutes, to ". . . plan and administer its programs of health, social and rehabilitative services through service districts and subdistricts. . ." composed of specifically delineated counties.
When UCH filed its application in August, 1982, and its Petition for Formal Administrative Hearing on December 22, 1982, service district six included Hillsborough and Manatee counties. 5/ At the time of the final hearing, however, Section 20.19 had been amended to create two subdistricts in District 6. Hillsborough and Manatee were included in District 6, Subdistrict A, while Polk, Hardee and Highlands counties were part of District 6, Subdistrict B.
On October 28, 1983, the Hearing Officer entered an order finding that the Department had failed to respond to Requests for Admissions filed on April 28, 1983, and for the reasons set forth in the order, the admissions would not be set aside. Included in the admissions, which were directed to the Department, was the following statement, ". . . That Petitioner, University Community Hospital, is within Local Health District 6, composed of Hillsborough and Manatee Counties." See Petitioner's Exhibit 17. At the time this request for admission was filed, April 28, 1983, the Intervenor Tampa General had not become a party to the proceeding. On May 3, 1983, Tampa General was given leave to intervene.
The Department's failure to timely respond to the Requests for Admissions resulted in it being precluded at final hearing from asserting that the change in the service district which was effective October 1, 1982, was applicable to the instant proceeding. Conversely, the Intervenor was not bound by such constraints since the Requests for Admissions were not directed to Tampa General and the Intervenor was given leave to intervene before Responses to the Requests for Admissions were required to be filed. 6/
Presently, District 6 is composed of five counties divided between two subdistricts. Chapter 381, Florida Statutes, requires the Department to evaluate applications based on service districts. In the case of cardiac catheterization and open heart programs, the Department has elected to examine the question of need on a district rather than a subdistrict basis.
Accordingly, UCH's service district includes the five-county district rather than the two-county subdistrict.
Tampa Heart's application for a CON
Rules 10-5.11(15(a) and 16), Florida Administrative Code, evaluate need for cardiac catheterization labs and open heart programs based on existing and approved labs and programs. A pivotal issue in this case is whether the Department's recommended approval of Tampa Heart's application for three catheterization labs and one open heart program is "approved" and must be considered in the need methodology established by rule.
The Department's proposed action regarding Tampa Heart has been challenged and is presently the subject of a 120.57(1), Florida Statutes, proceeding. No Recommended Order has been filed with the Department which could result in a dispositive Final Order being entered. Tampa Heart has tentative approval of its application which is subject to final agency action being taken after Section 120.57 proceedings have been concluded. Under such circumstances, the Department's proposed action has been said to constitute ". . . no agency action at all." Nelson v. Department of Agriculture and Consumer Services, 424 So.2d 860, 862 (Fla. 1st DCA 1982). Section 120.57 proceedings are intended to formulate agency action, not the review action taken earlier and preliminarily. McDonald v. Department of Banking and Finance, 346 So.2d 569, 584 (Fla. 1st DCA 1977). Also see Florida Convalescent Centers, Inc. v. Department of Health and Rehabilitative Services, No. 81-1212, 5 FALR 1019-A (October 7, 1982).
Moreover, UCH has advanced cogent reasons why Tampa Heart's application should not be considered in this case even assuming that final action had been taken on the application. The Petitioner's application was reviewed by the Department and tried before the Division on the basis of methodologies formulated to consider only local need. Tampa Heart's application was not reviewed under a locally based methodology established by rule but instead consideration was given to a need that was found to exist outside the boundaries of service district six. As was stated by the Department, Tampa Heart constitutes "a unique project [that] clearly does not fit neatly into locally generated, demand-based need methodologies." Petitioner's Exhibit 24 at
Since local need established pursuant to rule was not considered in Tampa Heart's application, it is inconsistent to include Tampa Heart's proposed facility in the analysis of local need set forth herein.
Tampa General's standing in this proceeding
At the final hearing, Tampa General established that it would lose an undetermined number of its private paying patients to UCH if the instant application were granted. Additionally, since Tampa General's rate of growth could be expected to decrease as a result of UCH's initiation of competing service, this would impact on Tampa General's expansion program and its ability to repay the bonds issued to fund expansion. This is sufficient to establish that Tampa General has standing to challenge the issuance of a certificate of
need to UCH. See Medfield Corporation v. Department of Health and Rehabilitative Services, 5 FALR 1955-A (August 1, 1983), adopted by the Department, 5 FALR 1955-A.
Pending and Miscellaneous
Motions
During the hearing, ruling was reserved on Petitioner's Exhibit 7, a list of physicians performing cardiac surgery at Tampa General which was authenticated by Dr. Vijay. This document is hereby admitted. Section 120.58(1)(a), Florida Statutes. Intervenor's Motion to Strike Mr. Dacus' rebuttal testimony and Petitioner's Motion to Strike the testimony of Woodrin Grossman and all testimony involving UCH's application for ten intensive care unit beds, are denied.
Petitioner's Certificate of Need should be granted
When a licensing agency such as the Department has set forth in writing the grounds or basis for proposed denial of a license, the applicant shall have the burden of proving entitlement by establishing the validity of the grounds asserted by the licensing agency for denial. Department of Transportation v. J.W.C. Company, Inc., 396 So.2d 778 (Fla. 1st DCA 1981); Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977).
The Petitioner has established by a preponderance of the evidence introduced at final hearing that a need exists for an additional cardiac lab and open heart surgery program in the service district, regardless of its definition. Further, the Petitioner proved that its proposed facilities conform with all pertinent statutory and rule criteria under which certificates of need are normally reviewed. Accordingly, the Petitioner's application for a certificate of need to establish a cardiac catheterization laboratory and open heart program in Tampa should be approved.
Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED:
That the Department of Health and Rehabilitative Services enter a Final Order granting a CON to Petitioner University Community Hospital to establish a cardiac catheterization laboratory and open heart surgical program in Tampa, Florida.
DONE and ENTERED this 5th day of March, 1984, in Tallahassee, Florida.
SHARYN L. SMITH
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 5th day of March, 1984.
ENDNOTES
1/ See Exhibit List attached as "Appendix A".
2/ "Full cost" is defined as the same and usual regular charges as are to be charged to other persons for similar medical and hospital treatment.
3/ The need projected in the Hillsborough-Manatee area under the rule methodology likely understates actual need. For example, while the rule projects 2,355 catheterizations at St. Joseph's and Tampa General in 1983, 3,078 procedures were actually performed or 723 more than projected.
4/ For example, there appears to be an economy of scale associated with cardiac programs which results in diminished control over personnel and procedures as volume increases beyond a certain point.
5/ The Petitioner's application was reviewed and evaluated by the Department based on then existing Health Service Area IV which included Pasco, Pinellas, Manatee and Hillsborough counties.
6/ Due to the possibility that the Intervenor could arguably be bound by the Requests for Admissions, this order has considered both the two and five-county areas in the needs analysis set forth in the findings of fact.
Petitioner's Exhibits
APPENDIX A
Exhibit List
1A Article from Chicago Sun-Times entitled "Laser Could Open the Way to Healthier Hearts".
1B Article from Discovery Magazine dated February 19, 1983.
Curriculum Vitae of Dean Mason.
Curriculum Vitae of James Jude.
UCH's CON application for cardiac catheterization lab and open heart
surgery program.
Two letters from Dr. Jorge Otero to Dr. Frank Tagliarini dated September 21, 1983 and September 26, 1983.
Minutes of the December 16, 1981 meeting of the Tampa Heart Institute Committee.
List of cardiac surgeons indicating number of patients admitted and revenues for the
period of October, 1980 through October, 1981.
UCH Master Plan Summary.
State Agency Action Report on UCH's CON application for a cardiac catheterization lab and open heart surgery program.
Florida Gulf Systems Agency, Inc. project review of UCH's proposal to implement cardiac catheterization and open heart surgical services.
Certificate of Need application for the addition of a second cardiac catheterization laboratory submitted by St. Joseph's Hospital.
The Community Medical Facilities Component,
District VI, Hillsborough-Manatee, prepared by local health council, dated August 1, 1983.
Minutes of Tampa Heart Institute Committee and Tampa Heart Center, Inc., other than those for the December 16, 1981 meeting.
State Agency Action Report on CON No. 1784 issued to TGH, dated October 26, 1981.
Memorandum from Julian Rice, dated July
25, 1983, regarding scheduling of operating slots for cardiac surgery at TGH.
Hillsborough County (Florida Hospital Authority Hospital Review Bonds - Offering Statement prepared by E.F. Hutton & Company,
Inc. and H. G. Nix, Inc., dated October 25, 1981.
Petitioner's Request for Admissions propounded on DHRS on April 28, 1983.
18A Excerpts from Petitioner'S First Set of Interrogatories propounded by UCH on DHRS.
18B Second Supplemental Answer to Interrogatories provided by TGH to UCH, dated June 13, 1983.
18C Excerpts from Petitioner's First Set of Interrogatories to Intervenor, TGH.
Projected Profit and Loss Summary for
St. Joseph's Hospital Cardiac Care Programs for Budget Year 1984.
Letter on Hillsborough County Hospital Authority stationery containing comments relative to criteria against which applications are evaluated, proposed amendments to Rules 10- 5.11(15) and (16).
Document entitled "Medicare Contractual Allowance for Cardiac Surgery", prepared by Price Waterhouse dated September 13, 1983.
Analysis of Need for Cardiovascular Surgical and Catheterization Programs for UCH, prepared by Shotwell Anderson dated October 28, 1983.
Price Waterhouse document entitled "Hospital and Medical Update", dated September, 1983.
Respondent's Exhibit
1 DHRS letter of denial to UCH regarding
the latter's CON application for a cardiac catheterization lab and open heart surgery program .
Intervenor's Exhibits
TGH's CON #1784 and accompanying State Agency Action Report.
CON #2422 granted to Tampa Heart Institute
for construction of a 135-bed cardiac specialty hospital in Tampa, Florida.
CON application for 180 medical/surgical
beds and 10 cardiovascular surgical intensive care beds submitted by UCH.
Letter to Mark Druash from George Britton, dated October 18, 1982, concerning UCH's two CON applications.
5A District 6 cardiology projections, using 1981 area local use rate and 1985 population prepared by Herman Smith Associates.
5B Tampa General Hospital Historical and Projected Cardiology Utilization, Fiscal
1981-1988, prepared by Herman Smith Associates.
5C District 6 Optimal Capacity Utilization - 1985, prepared by Herman Smith Associates.
6A Hillsborough County Hospital Authority Forecasted Contribution Margin from Cardiac Program Fiscal Years Ending September 30, 1984-1988, prepared by Price Waterhouse.
6B Hillsborough County Hospital Authority Forecasted Provision for Indigent and Bad Debt Care for Fiscal Years Ending September 30, 1984-1988, prepared by Price Waterhouse.
6C Hillsborough County Hospital Authority Comparative Expense Per Admission, prepared by Price Waterhouse.
7 Map of Tampa, Florida.
COPIES FURNISHED:
Alan C. Sundberg, Esquire Cynthia S. Tunnicliff, Esquire George N. Meros, Jr., Esquire CARLTON FIELDS WARD EMMANUEL
SMITH & CUTLER
Post Office Drawer 190 Tallahassee, Florida 32301
James M. Barclay, Esquire Department of Health and
Rehabilitative Services Building Two, Suite 256 1321 Winewood Boulevard
Tallahassee, Florida 32301
E. G. Boone, Esquire
Robert T. Klingbeil, Jr., Esquire
E. G. BOONE, P.A. 1001 Avenida del Circo Post Office Box 1596 Venice, Florida 34284
Alicia Jacobs, Esquire General Counsel Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32301
David H. Pingree, Secretary Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32301
| Issue Date | Proceedings |
|---|---|
| Apr. 24, 1984 | Final Order filed. |
| Mar. 05, 1984 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Apr. 23, 1984 | Agency Final Order | |
| Mar. 05, 1984 | Recommended Order | Petitioner should be granted a Certificate of Need (CON) for construction of a cardiac catheterization laboratory and open heart surgery program in Tampa, Florida. |
