STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS

SAN MARCO SURGI-CENTER, LTD., )

)

Petitioner, )

)

vs. )

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

) CASE NO. 84-3712

Respondent, )

and )

)

MEMORIAL MEDICAL CENTER OF )

JACKSONVILLE, INC., d/b/a ) MEMORIAL MEDICAL CENTER; SOUTHERN ) BAPTIST HOSPITAL OF FLORIDA, INC., ) d/b/a BAPTIST MEDICAL CENTER, )

)

Intervenors. )

)

RECOMMENDED ORDER

Final hearing in the above-styled case was held before Mary Clark, Hearing Officer of the Division of Administrative Hearings, on October 28, 29 and 30, and December 16 and 17, 1985, in Jacksonville, Florida. The parties were represented as follows:

For Petitioner: Chris H. Bentley, Esquire San Marco William E. Williams, Esquire Surgi-Center, Jeannette Andrews, Esquire Ltd. Post Office Box 1739

("San-Marco") Tallahassee, Florida 32302

For Respondent: Douglas Mannheimer, Esquire Department of Richard Power, Esquire Health & Rehab. P.O. Drawer 11300

Services Tallahassee, Florida 32302 ("HRS")

For Intervenor: Michael J. Dewberry, Esquire Memorial Medical Christopher Hazelip, Esquire Center 1300 Gulf Life Drive ("Memorial") Jacksonville, Florida 32207

For Intervenor: E. Robert Meek, Esquire Baptist Medical Post Office Box 240

Center Jacksonville, Florida 32201 ("Baptist")

BACKGROUND

ISSUES AND PROCEDURAL MATTERS

This proceeding was initiated when HRS proposed to deny San Marco's application for Certificate of Need No. 3304 for an ambulatory surgical center in Jacksonville, Duval County, Florida. San Marco filed a timely petition for formal hearing. Initially four intervenors were involved: Baptist, Memorial, Surgical Services of Jacksonville, Inc. and Medivision of Duval County, Inc.

Surgical Services filed its Notice of Voluntary Dismissal on March 7, 1985, and Medivision withdrew on October 28, 1985.

At the hearing, San Marco offered evidence through eight witnesses and 28 exhibits; HRS presented one witness and one exhibit; and the two intervenors presented nine witnesses and 26 exhibits. Certain exhibits, by stipulation of the parties, were entered as "Hearing Officer Exhibits." Those four exhibits included the state agency action plan, the petitioner's application for CON, a three-volume state health plan and the District IV health plan

The primary issue is whether San Marco is entitled to Certificate of Need No. 3304 for an ambulatory surgical center which will include two operating rooms. During the course of the proceeding several ancillary issues developed; those issues are summarized here and are addressed in the body of this recommended order:

1. In determining need for a free-standing ambulatory surgery center, is it appropriate to consider evidence of out- patient surgical services provided by hospitals? (Petitioner's Motion in Limine, T-9).

   
   

2. Is the project proposed by San Marco an "ambulatory surgical center" as defined in subsection 381.493(3)(a), Florida Statutes? (Respondent's Motion to Dismiss, T-500).

   
   

3. Should the intervenors, Baptist and Memorial be dismissed for failure to establish standing? (Petitioner's Motion for directed verdict, T-1182).

The briefs, memoranda and proposed orders of the parties have been carefully considered in the preparation of this Recommended Order. A specific ruling on each proposed finding of fact is included in the Appendix attached hereto.

On March 25, 1986, Petitioner filed a Motion for Restricted Reopening of Record. Basis for the motion is Medivision's withdrawal of its application for certificate of need. The motion is denied.

FINDINGS OF FACT

1. The Parties

   
   

   1. San Marco is a limited partnership. The owners are Stuart Yachnowitz, individual general partner and sole limited partner; Surgi-Centers of America, Inc., (SCA), a Florida corporation, corporate general partner; and Jacksonville Women's Health Organization, Inc., a Florida corporation, (JWHO), corporate general partner. The sole shareholders of SCA are Stuart Yachnowitz, his father, Joseph Yachnowitz and Susan Hill. The owners of JWHO are Joseph and Stuart Yachnowtiz. (T-47, 48, CON application pp. 20-23). San Marco intends to include local physicians in the ownership of the surgicenter. (CON application p. 40)

   2. The surgieenter will be managed by Y and S Management Corporation, the company now providing management services to JWHO. Y and S Management Corporation is owned by Joseph and Stuart Yachnowitz. Including JWHO, it manages eight licensed abortion clinics throughout the country as well as two free-standing ambulatory surgery centers (FSACs) which primarily perform abortions. Susan Hill, the chief operating officer for Y and S for the past ten years, prepared the CON application for the surgicenter. (T-47-49, 108-111).

      
      

   3. The building at 1561 San Marco Boulevard in Jacksonville, currently occupied by JWHO for its licensed outpatient abortion clinic, will be renovated and occupied by San Marco. The facility will be expanded from approximately 3000 square feet to 4700 square feet. Two operating rooms (ORs) will be added along with ancillary facilities necessary for licensure as an ambulatory surgical center. (Petitioner's Exhibit #1, CON application p. 4, T-52, 54, 55). Abortions will continue to be performed at the facility at an estimated rate of

      168 procedures a month. (Petitioner's Exhibit #2, T-102, 103). Other surgical procedures will be added in the categories of gynecology, general surgery, and plastic surgery at the projected rate of 15 per month for the first month of operation to 90 per month after a little over a year's operation. The 90 additional procedures per month is anticipated to continue through the second year of operation. (Petitioner's Exhibit #2, CON application p. 40, T- 102, 103). San Marco anticipates drawing some patients for the additional procedures from its existing caseload and utilizing some physicians who currently practice at the abortion center. (T-62, 63, 101, 102, 247).

      
      

   4. Memorial is a not-for-profit acute care hospital, located in Duval County in close proximity to the San Marco facility. Since May 1985, Memorial has been providing outpatient surgery services in a dedicated outpatient facility adjacent to the acute care hospital. The same day surgery" facility contains two laser rooms and four operating rooms. (T-854, 913, 914).

      
      

   5. Baptist is a not-for-profit acute care general hospital also located within close proximity to the San Marco facility. It currently provides outpatient surgical services in twelve ORs and 3 cystoscopy rooms in its main facility. Sometime around August 1987, its new adjacent 17-story structure, The Pavillion, is anticipated to open. The fourth floor of that facility will be dedicated to outpatient surgery and will include four operating rooms and two cystoscopy rooms. (T-939, 984, 987, 988, 1045, 1047).

      
      

   6. HRS reviewed San Marco's application and determined that it should be denied on the following basis: "There appears to be an insufficient projected number of outpatient procedures to allow this facility to be viable." (State Agency Action Report, September 6, 1984).

      
      

2. The State and Local Health Plans

   
   

   1. The 1985-1987 State Health Plan does not directly address the need for additional ambulatory surgical centers. It adopts as an objective that ". . . By 1989, 30 percent of all surgical operations should be performed on an outpatient basis." (Vol. II p. 81). It addresses ambulatory surgical centers as an alternative delivery system which lowers costs by substituting less costly services. (Vol. II p. 76). And, it outlines a brief history of the increase of ambulatory surgical centers in Florida during the decade of the 1980s. It acknowledges, "As in the case of hospitals, saturation of the marketplace for outpatient surgery has caused new entrants into the field to be more highly specialized in order to attract sufficient business. (Vol. II p. 27).

   2. HRS District IV includes Duval, Nassau, Baker, Clay, St. Johns, Flagler and Volusia counties. The 1985 District IV Local Health Plan adopts sub-area boundaries in planning for certain specialized services, including ambulatory surgery. Sub-area A is comprised of Baker, Nassau, Duval, Clay and St. Johns counties. (p. 112). In contrast to the State Health Plan, it makes specific recommendations: that sub-area boundaries should be used for planning purposes; that no additional units should be approved prior to the adoption of state rules; and that no ambulatory surgery units should be added to the district through 1986, when the agency will review the matter again. (p. 20). Utilizing 1983 data to base its projections and the need methodology of a challenged draft state rule, it concludes that Sub-area A has a surplus of 14 ambulatory surgical units. (p 143).

      
      

3. Existing Like Facilities and Other Alternatives to the Proposed Service.

1. Ambulatory surgery is typically performed in three types of facilities: general hospitals which mix inpatient and outpatient surgery in main operating rooms; hospitals which maintain separate "dedicated" outpatient operating rooms, sometimes even in adjacent buildings; and free-standing surgical centers which are unassociated physically or administratively with a hospital. (T. 387-390). Testimony in this proceeding was virtually unanimous as to the distinct disadvantages of serving surgical outpatients in a non-dedicated operating room setting. The mingling of' less ill or well outpatients with seriously ill inpatients increases the opportunity for contagion, heightens patient anxiety, deprives patients of access to their families, presents scheduling problems (including the bumping of outpatients in emergencies), and generally increases the cost of the service to the outpatient consumer. (T-386, 388-392, 1125- 1128). Both Baptist and Memorial have recognized the need for separate, dedicated operating rooms.

   
   

2. The comparison of hospital-based dedicated ambulatory surgery rooms with free-standing ambulatory surgery rooms stirs somewhat more controversy. There are advantages and disadvantages to both. A hospital-based unit may or may not be more accessible to the physicians. While doctor's offices are often near hospitals, parking still is a problem. While some patients might prefer to avoid a hospital setting altogether, some are comforted by the proximity in the event of an emergency or decision to recuperate overnight. While costs are generally lower in a free-standing facility, there may be an advantage to having the expensive equipment immediately available in some cases (T-241-246, 392,

   758-760,996, 1000-1001).

   
   

3. If comparing non-dedicated ORs to free-standing ambulatory centers is comparing apples to oranges, then comparing hospital-based ambulatory centers to free-standing ambulatory centers is comparing red apples to green apples. Personal preferences often dictate the choice, but either one will make a pie.

   
   

4. There exists no adopted rule governing methodology for determining need for ambulatory surgery centers. In this proceeding, each party presented its own methodology through an expert witness. Those methodologies are described as follows:

   
   

   1. Petitioner's Need Methodology

5. Howard Fagin, PhD, was qualified as an expert in Health Planning and Health Economics without objection. (T-377) In his opinion there is a need for additional ambulatory surgery rooms. His opinion is based on a four-step process which includes:

   1. Analysis of the service area and population within that service area;

   2. Review of existing facilities providing comparable or related services;

   3. Examination of the utilization of those services within the existing facilities; and

   4. Analysis of the need for new health care facilities based upon population and need for new services in the area. 393, 394)

   
   

6. Dr. Fagin identified Duval County as the primary service area, and Nassau, Baker, Clay and St. Johns counties as the secondary service area. The surrounding counties depend on Duval for their medical care in many cases. Together, the primary and secondary service areas comprise HRS District IV, Sub- area A (Local Health Plan, p. 112). Population figures are taken from those compiled and projected by the Executive Office of the Governor. (T.-396)

   
   

7. For several reasons it is difficult to obtain data on out-patient surgical procedures in Florida. Out-patient surgery is a relatively new phenomenon; some hospitals do not separate in-patient from out-patient procedures in reporting; other hospitals count cases rather than procedures. (T-398) Dr. Fagin felt comfortable with data obtained from the state and from the N. E. Florida Health Planning Council, as adjusted with the use of data obtained from Baptist and Memorial for 1982, 1983, and 1984. (Petitioner's

   exhibits #11, 12 and 13) For 1984, he figured 31.1 percent of the surgical cases in Duval County were out-patient cases, with the trend increasing. (T-403)

   
   

8. Petitioner's Exhibit #15 is the summary of Dr. Fagin's need analysis with two columns, one assuming an out-patient surgery rate of 35 percent of total surgeries, and the other assuming a rate of 40 percent. The number of available ambulatory surgery rooms (24) is based upon the availability of four rooms in one recently opened free-standing ambulatory center (AMI) and twenty other free-standing or dedicated (used only for out-patients) operating rooms in Duval County hospitals. The analysis assumes that the rooms will be operated five days a week, two hundred and fifty days a year (5 days x 52 weeks, minus 10 days for holidays and "down-time"). The figure of 960 cases per year, per room, is further derived from the assumptions the room will be operated 6 hours a day, an average case (including preparation, surgery, and cleanup) will take 1.25 hours, and the rooms will be utilized 80 percent of the time. In addition to the number of cases described to dedicated and free-standing rooms through that process, 3000 cases are presumed to be done each year in non-dedicated operating rooms. This figure is derived from rounding off the reported 3030 out-patient cases in non-dedicated units in 1983. The rationale for including those cases is that due to lack of sufficient free-standing units, the out-patient services must be provided in the regular hospital OR environment. The number of such cases, according to Dr. Fagin, should decrease as the number of free-standing units increases. (T. 414-415).

   
   

9. Dr. Fagin's methodology applied to various hypothetical fact situations yields the following conclusions as to need for (+), or excess of (-

   ), free-standing ambulatory surgery operating rooms:

   1. Assuming a service area including all of HRS District IV, Sub-area A, 24 currently available rooms; and 960 cases per room per year: (Petitioner's Exhibit #15)

      
      

      35 percent 40 percent

      + 6 rooms + 10 rooms

      
      

   2. Same assumptions as A, above: (intervenor`s Exhibit #16)

      
      

      30 percent rate

      + 1 room

      
      

   3. Same assumptions as A, above, except limited to Duval County: (Intervenor Exhibit #17)

      
      

      30 percent 35 percent 40 percent

      -4 rooms -1 room +2 rooms

      
      

   4. Same assumptions as A, above, except 31 existing rooms, instead of 24: (Intervenor Exhibit #18)

      
      

      30 percent	35 percent	40 percent
      not calculated	-2 rooms	+3 rooms

      
      

   5. Same assumptions as A, above, except 31 existing rooms and service area limited to Duval County: (Intervenor Exhibit #19)

      
      

      30 percent	35 percent	40	percent
      -11 rooms	-8 rooms	-5	rooms

      
      

   6. Same assumptions as A., above, except 1200 cases per room per year, instead of 960: (Intervenor Exhibit #20)

      
      

      30 percent	35 percent	40 percent
      -4 rooms	-1 room	+3 rooms

      
      

   7. Same assumptions as A, above, except 1200 cases per room and 31 existing available rooms: (Intervenor Exhibit #21)

      
      

      30 percent 35 percent 40 percent

      -11 rooms -8 rooms -4 rooms

      
      

   8. Same assumptions as A, above, except 1200 cases per room, 31 existing available rooms and Duval County only: (Intervenor

      Exhibit #22)

      
      

      30 percent 35 percent 40 percent

      -15 rooms -13 rooms -10 rooms

      
      

      1. HRS Need Methodoloy

         
         

10. Reid Jaffe, Medical Facilities Consultant for the Office of Community Medical Facilities, was qualified as an expert in health care planning with emphasis on certificate of need. (T-533) He explained the ambulatory surgical center need methodology as summarized in DHRS Exhibit #1.

11. The Department typically uses a single county as its planning area for ambulatory surgery applications. (T-556). Therefore, the data is based on Duval County population and services provided by Duval County facilities. To obtain the volume of surgical procedures in Duval County hospitals, letters were written requesting the break-out for the period February 1984-January 1985. While the process is not an exact science, Mr. Jaffe feels that since the Department asks for the same type of information over a period of time, the anomalies in the figures will become obvious. (T-569). Based upon the returns to the questionnaire, the Duval total surgery rate, (out-patient and in-patient) was determined as 97.7 per 1000 population; the out- patient surgery rate was determined to be 30.2 per 1000 population. The July, 1987 population projection was 623,091. Need was projected at both 30 percent out-patient to total surgeries and 40 percent out-patient to total surgeries. The out-patient surgical potential (number of procedures) is derived from subtracting the hospital out-patient surgical volume from the projected number of procedures needed at a 30 percent and 40 percent rate. From that line was deducted the projected breakeven procedures for each of three free-standing ambulatory surgery centers in various stages of development in Duval County. The 30 percent rate yielded a bottom line of 5,922 excess procedures, and the 40 percent rate yielded a bottom line of 165 procedures remaining for some other facility to perform (unmet need). Since HRS considers the facility breakeven point to be considerably more than 165 procedures per year, it concludes that no additional facilities are required at this time. HRS did not explain its assumption that the rate of surgeries performed on an out-patient basis at hospitals would remain constant (30.2 per 1,000 population), while the overall percentage of out-patient surgeries to total surgeries would increase to 40 percent. (DHRS #1, T-569-576).

    
    

    1. Intervenor's Need Methodology

    
    

12. Michael Swartz testified for Memorial and Baptist as an expert in health care planning and hospital administration. (T-704) He rejected the second-hand data utilized by both Petitioners' and HRS' experts. He devised a poll that was sent to all area hospitals and attempted to verify the responses through direct contacts and, in some instances, a walk-through of the facilities and review of hospital records. Information reported in State Agency Action reports was used for St. Luke's, since that one hospital failed to respond. (T- 704-707, 711-713).

    
    

13. Like the other need methodology experts in this proceeding, Mr. Swartz relied on population projections from the Executive Office of the Governor. (T- 711). The geographical service area was considered Duval County, because that is what the state considers and in Mr. Swartz' opinion an ambulatory surgery center draws from a less than 30-minute driving period. (T-712). Mr. Swartz found in his data gathering that, while the number of surgeries per 1000 population has fluctuated only slightly, the mix of surgeries (in-patient to out-patient) has shown a dramatic increase in out-patient procedures. (Intervenor's Exhibit #5, T-722). After determining what he considered were the actual numbers of surgeries performed in 1983 and 1984, the actual number of operating rooms in Duval County, and the actual amount of time spent for each case, including clean-up, he determined that the bottom line showed a utilization rate of only 27.8 percent of existing surgical suites in Duval County in 1984. (Intervenor's Exhibit #6, T-729). Utilizing a fixed use rate of 103.3 surgery cases per thousand, Mr. Swartz projected an excess capacity of 109,214 cases in hospitals in 1986 and 1987, and an excess capacity for 19,279 cases in free-standing surgical centers (including AMI, Surgicare III and Medivision) in 1986 and 1987. (Intervenor's Exhibit #12 and #14, T-749, 750).

14. The most fatal flaw in Mr. Swartz' ultimate conclusion, that there is a current and projected excess of surgery suites in Duval County, is that after his painstaking data-gathering process he lumped together all types of existing operating rooms and assumed they were all equally appropriate to handle in- patient and out-patient surgeries. This assumption is contrary to the weight of evidence in this proceeding.

    
    

15. Of the three methodologies presented, I find Dr. Fagins most reasonable. It requires some adjustments, however, to conform to the evidence. Proceeding from Petitioner's Exhibit #15, I find the 40 percent out-patient surgery rate reasonable and consistent with credible expert testimony from all sides in this case. (Howard Fagin - T-413; Reid Jaffe - T-573; Rena Blackmer - T-106l; Carol Whittaker-T- 990: Eileen Fullernveider, T- 1125). Utilization of Subdistrict A as the service area is also 4 appropriate here. It is consistent with the District IV local health plan and recognizes the fact that Jacksonville draws from outlying counties for the sophisticated range of medical services it provides. (T-254, 255) while ordinarily free-standing surgery centers might be more neighborhood oriented and draw from a closer geographical area, it is noted that Duval is the only county in Subdistrict A with free-standing or dedicated operating rooms and for that reason patients could be expected to travel into Jacksonville. (Petitioner's Exhibit #14) The one-hour travel time addressed in the CON application, p. 226, would include some travel from the outlying counties. Reid Jaffe, the HRS expert, does not agree with the local health plan because it would be unlikely that a resident of a county that has a hospital or multiple hospitals in it and that have ambulatory surgical programs, to bypass those closer facilities just to go to Jacksonville." (T-554, 555). In the absence of dedicated ambulatory surgical programs, however, some patients very likely would travel to Jacksonville. The continued projection of 3000 cases in non-dedicated operating rooms is reasonable, since not all ambulatory surgery patients would travel to Jacksonville. Further, even when it completes its new ambulatory center, Baptist anticipates continuing to conduct approximately 2096 of its out-patient surgeries in the main ORs. (T-1063, 1064, 1085). Patient and physician loyalty would also account for some continued out-patient surgeries in those hospitals without dedicated ORs.

    
    

16. The population projection for 1988 is appropriate, given a two-year planning horizon and the fact that the final hearing in this proceeding was continued until the end of 1985. The surgical rate of 102.94 per 1000 population is slightly higher than the 97.7 rate utilized by HRS but, just under the 103.3 rate utilized by Intervenor's expert, Howard Swartz. (Intervenor's Exhibit #14).

    
    

17. Petitioner's Exhibit #15 understates the available ambulatory surgery rooms projected for 1988. A second free- standing ambulatory surgery center has been approved for Jacksonville and has completed its legal proceedings: Surgicare III, with 3 operating rooms. (T-562, Surgical Services of Jacksonville v. HRS, 479 So.2d 120, Affirmed 11/18/85). The record in this proceeding does not clearly reveal the status of a third surgical center, Medivision, with two rooms dedicated to opthomologieal surgery. Since that facility may still be in legal limbo, its rooms are not being counted. While Intervenor, Baptist, on cross examination posited a hypothetical application of Petitioner's methodology which included seven additional available rooms, no competent evidence followed up to substantiate any more than three additional beds. The available ambulatory surgery rooms factor in the methodology is therefore adjusted to 27.

18. Petitioner's methodology also understates "available capacity" by understating the number of cases which could be handled per room, per year. While Dr. Fagin's methodology utilized 960 cases per room, per year, the weight of evidence and expert opinion established that at least 1300 cases per room, per year is a more realistic approximation. Intervenor's need expert, Michael Swartz, determined capacity based on ten available hours per day, five days a week, at 75 percent effici-ency (American College of Surgeons Standard) to be 2,077 cases per room, per year. (Intervenor's Exhibit #9, T-735- 737). The Hill-Burton standard utilized to determine the need for construction funds in the 1970's was 1200 cases per year, based upon data collected in the 1960s when the average time for a ease was 2 hours. (T-740, 741). Average time today is far less. (T-149, 240, 1064) Petitioner's own projected utilization assumes a capacity for 2 operating rooms, with evening and Saturday scheduling to be 300 procedures a month. (Petitioner's Exhibit #2). This translates into 1800 procedures per year, per-room. while recognizing that counting procedures rather than cases yields a higher number, San Marco never asserted that it anticipates performing two procedures for almost every case it handles. Yet this ratio is the only means of reconciling the difference between its expert's projection and that of its administrator.

    
    

19. The above-described adjustment to Petitioner's need methodology results in the following adaptation of Petitioner's Exhibit #15:

    
    

    40 percent Am. Surg. Subdistrict A

    
    

    1988 Population Surgical Rate Total Surgery		861,120 102.94/1000 pop. 88,644
    Ambulatory Surgery		35,457
    Available Am. Surg.	rooms	27
    Available capacity (1300 cases)		35,100
    Am. Surg. in Hospitals		3,000
    Net Need Cases		-2,643
    Net Need Rooms		- 2

    
    

    1. Quality Of Care

       
       

20. San Marco will occupy a building presently occupied by the Jacksonville Women's Health Organization, a licensed abortion clinic. If the certificate of need is granted, the existing building will be remodeled to provide two operating rooms and ancillary facilities required for licensure as an ambulatory surgical facility. HRS witness Reid Jaffe does not question the ability of the structure to meet requirements for licensure and does not question the ability of the proposed center to provide quality care. (T-584). The center will develop bylaws and protocols to maintain quality of care. To practice at the center, a physician must be licensed in Florida and must have privileges in good standing at a local hospital (T-59, 60).

    
    

21. Jaroslav Fabian Hulke, M.D., was accepted as an expert in obstetrics and gynecology. He has had extensive experience in teaching and conducting out- patient surgery. (Petitioner's Exhibit #7). He has become personally familiar with Y & S Management's facilities and with their staff through his work at the center in Raleigh, North Carolina. He has also observed the facility in Jacksonville and assisted Susan Hill in developing the equipment list for the facilities. His high commendation of Miss Hill, her facilities and the planned equipment was without equivocation; his testimony as to the anticipated quality of care to be offered by this facility is most credible. (T-351, 353, 355).

22. Anesthesia classifications range from I to IV depending on the condition of the patient. Class I and II are relatively healthy. The San Marco center will handle class I and II; some hospital out-patient units handle class III patients on a selected basis. (T-114, 141, 1120).

    
    

23. Statistics on emergencies and deaths in free-standing ambulatory centers are not available now. The Free-standing Ambulatory Surgical Association (FASA) is in the process of gathering data. (T-1129, 1153, 1154). Depending on how they are run, equipped and staffed, the free-standing centers are considered extremely safe. (T-1128). Nothing in this proceeding would hint that the proposed administration, staffing or equipment for San Marco is less than high quality.

    
    

    1. Staffing

       
       

24. By their Prehearing Stipulation filed on October 25, 1985, the parties agreed that there exists in Duval County an adequate labor pool of health manpower and management personnel to staff an ambulatory surgical facility. San Marco has the ability, experience and intention to obtain adequate, well- trained personnel to provide staffing for the proposed center. (T-72-75, 232- 236, 351-352).

    
    

    1. Physical and Economic Accessibility

    
    

25. The parties have stipulated that the proposed facility is geographically available to all residents of Duval County. (Prehearing Stipulation, filed October 25, 1985). While the center will focus on the Duval County area, it also will likely draw from surrounding counties to a lesser degree. The existing abortion center already serves the wider area and as found in paragraph 12 above, no free-standing ambulatory center or dedicated out- patient ORs exist in Subdistrict A outside Duval County. For that reason, patients could be expected to drive as much as an hour to get to the facility. (CON application, p. 226).

    
    

26. San Marco claims that it will serve 15 percent medicaid and 5 percent medicare patients. (CON application pp. 91-136). The Raleigh-Surgi-Center was used as a model since it is the one facility that receives medicaid reimbursement for non-abortion procedures. (T-89,160). However, while Medicaid does not reimburse for abortions, the State of North Carolina provides state funds and apparently those patients are computed in Raleigh's 21.6 percent figure. (T-89,90). The validity of the model is undermined by the fact that no such reimbursement occurs in Florida. (T-161).

    
    

27. Even though the 20 percent Medicaid and Medicare projection is overstated, economic accessibility is enhanced by the willingness of the center to reduce fees for abortion procedures for otherwise Medicaid eligible patients by $50.00 or $60.00, which sum represents the management fee portion of the procedure cost. (T-158-160). More significantly, the projected standard fee for other than abortion procedures, $300.00 - 400.00, is substantially lower than fees at hospitals, including hospitals with separate ambulatory units. (T- 57, 81-82, 907, 1070, 1071, Petitioner's Exhibits #19, 20, 21, 22).

    Capital Costs and Financial Feasibility

    
    

28. The total anticipated project cost for the proposed center is

    $246,000.00, including $80,000.00 for renovation of the building and approximately $133,000.00 for the purchase of equipment. (T-94-98, 172-173, 327). Capital is available for project start-up through the personal funds of millionaires, Stuart and Joseph Yachnowitz. (T-172).

    
    

29. In its review of the application, HRS concluded:

    "There appears to be an insufficient projected number of out- patient procedures to allow this facility to be viable." (State Agency Action Report, Hearing Officer Exhibit #1). At hearing, HRS witness Reid Jaffe testified that because of the co-mingling of revenues from the abortion center and the proposed ambulatory surgery center, the financial feasibility of the project could not be determined. (T. 588, 589). On the other hand, if the revenues are co-mingled and if the projections in the applicant's pro formas are accurate, then the facility ought to do better than break even. (T-600-601).

    
    

30. Christopher Fogel, Petitioner's expert accountant, represents Y & S Management and the ten out-patient facilities owned by Joseph and Stuart Yachnowitz. (T-182, 183) His financial projections for the proposed facility are found in Petitioner's Exhibits #5 and #6. The first projection is based upon the fee of $300.00 per procedure, for one hour of OR time, and the second is based upon $400.00, for 1.3 hours of OR time. The projections presume the facility would continue to offer its existing services (abortions) at its current level and expand to 250, 500 or 1000 procedures per year. At the

    $300.00 per procedure level, the facility would begin to make money with 500 additional procedures a year. However, by adding back 50 percent of the management fees (profit in the fees available to the Yachnowitz') and adding back depreciation and amortization, a positive cash flow results without any additional procedures, and increases substantially for 250, 500 and 1000 procedures at both the $300.00 and $400.00 per procedure rate. (T-198-206). Given the worst case scenario (no additional procedures), the owners are losing money only for tax purposes, but are actually increasing cash flow through the legitimate tax deduction of a loss which is not a loss of cash. (T-206).

    
    

    H. Impact on Competition

    
    

31. The introduction of a free-standing ambulatory center in Duval County had a positive dynamic effect on existing traditional providers of surgical care in Duval County. Prices were lowered and more hospitals began out-patient surgery programs of their own. While the changes in costs and methods of surgical services is also attributable to pressure and incentives from insurers, no one disputes that the competition from AMI (the one free-standing facility in Duval County that is currently operational) was healthy. (T-639, 640, 1132,

    893-894, 1061, 996- 997, 239). HRS health care planning expert, Reid Jaffe is of the opinion that currently the four ORs at AMI, the two opthalomological ORs at Medivision, and the 3 general ORs of Surgicare III (approved but not yet opened) are sufficient competition to the hospitals and to each other (T-564- 565, 643).

    
    

32. No one seriously contends that the addition of San Marco's 2 ORs would put an existing facility out of business. Memorial's Chief Financial Officer, Earl Winston Lloyd, expects his facility's new out-patient unit to continue to be profitable with or without San Marco. Memorial's out-patient facility has exceeded Memorial's expectations in its productivity and profitability (T. 871- 874). John Anderson, Chief Financial Officer at Baptist, is concerned that

    Baptist will lose at least 35 procedures per month which are currently being performed at Baptist by physicians who have indicated an interest in practicing at San Marco. (Intervenor's Exhibit #23, T-943-945). However, he doesn't know whether those same doctors are performing out-patient surgeries in other facilities or whether those surgeries might be the ones that are taken to San Marco. (T-976). Rena Blackmer, Director of Surgical Services at Baptist, testified that when competing out-patient units opened at A.M.I., Memorial and St. Lukes, she felt initially that Baptist was losing a share of the market, but there has not been a continuing adverse effect. (T-1062).

    
    

33. In 1985, Memorial`s excess revenue over expenses was approximately

    $2.5 million, with gross patient revenues of $80-82 million. (T. 863, 864). In 1985, excess revenue over expenses for Baptist was approximately $10 million. A

    $4.6 million loss on refinancing a debt is not included in that total; however, the $4.6 million is a balance sheet entry which impacts the income statement and is not a cash item. (T-956, 957) Total operating revenue in 1985 was $96 million. (T-955)

    
    

34. David Mobley M.D. is a plastic surgeon who has been medical director of the Jacksonville Womens Health Organization since 1976. He practices at Baptist Medical Center, and his name appears on Intervenor's Exhibit #23 as one of the doctors whose out-patient surgeries the hospital is concerned about losing to San Marco. Dr. Mobley performs in his private office approximately ten surgeries a week that he would like to transfer to San Marco. Among as those cases are performed in his office, he is reimbursed only the fee that he receives for the same procedure done in a hospital. He absorbs the cost for his operating room at his office, his staff and supplies. (T- 247, 248). For the patient or his insurer however, the cost for the procedure would be at least twice as much in a free-standing surgery center as in the physician's office.

    (T-268). San Marco: Abortion Clinic or Ambulatory Surgical Center?

    
    

35. From all the evidence in this proceeding the uncontrovertible fact emerges that when and if it is approved, San Marco Surgi-Center will merge with the Jacksonville Women's Health Organization and the two entities will make up a single health care facility: the building is the same; the equipment is the same; the owners are primarily the same; the managers are the same; and for purposes of predicting financial success, the revenue and expenses of the two entities have been considered one and the same.

    
    

36. San Marco projects that even after two years of operation as a surgical center, a majority of its procedures will remain abortions. (Petitioner's Exhibit #2). Abortions are accomplished in health care facilities through a variety of surgical techniques, the most common of which is dilation and evacuation (D & E). (T-346, 347).

    
    

37. Even though D & E's are expected to predominate at the facility in terms of projected number of procedures (168 per month, compared to 90 other surgical procedures per month, by June 1988), the D & E's will not predominate either in gross revenue from fees or in the anticipated OR time. San Marco anticipates the average patient charge for surgeries other than abortions to be

    $400.00 per case and the average OR time to be 1.3 hours. (T-93, 149). The non-medicaid patient charge for a D & E is $185.00, and the time in the OR room is generally about twenty minutes. (T-148, 158). Taking the same month, June 1988, and multiplying the number of abortions first by fee, then by OR time, yields a total of $31,080 in fees and 55.4 hours in the OR room. The same

    process for the 90 other surgical procedures yields $36,000.00 in fees and 119.7 hours OR time.

    CONCLUSIONS OF LAW

    
    

38. The Division of Administrative Hearings has jurisdiction in this proceeding pursuant to Section 120.57(1), Florida Statutes and Section 381.494(8)(e), Florida Statutes.

    
    

39. San Marco has the burden of proving it meets the criteria in the statute and rules, and is entitled to a CON. Palm Beach-Martin County Medical Center v. HRS, 7 FALR 5613 (1985).

    
    

40. San Marco requires a certificate of need in order to be licensed as an ambulatory surgical center. Section 381.495 Florida Statutes. San Marco's application is not precluded by Section 381.493(3)(a), Florida Statutes, ". .

    . a facility existing for the primary purpose of performing therapeutic abortions . . . shall not be construed to be an ambulatory surgical center.

    
    

41. The phrase "existing for the primary purpose" is not defined. HRS conjectures that it means the majority of procedures are abortions. Even though the proposed facility anticipates that by the end of its second year it will still be performing more abortions than the combined other types of procedures, more time will be spent on the other procedures and more gross income will be received from them. "Primary" could just as well be measured in time or income as in numbers of procedures. Under HRS' theory, an abortion center could never convert to an ambulatory surgical center and still perform abortions as there would likely be a period of time that the facility would be performing more abortions than anything else. Similarly, it would be perilous for a duly licensed ambulatory surgical center to ever undertake abortions, as it might one day surpass the magic fifty percent limit and be decertified. The legislature could not have intended such an absurd result. When the meaning of a statute is at all doubtful, the law favors a rational, sensible construction. Fla. Jur. 2nd, STATUTES, Section 185. See also Agrico Chemical Co. v. State Department of Environmental Regulation, 365 So.2d 759, 766 (Fla. 1st DCA 1978).

    
    

42. The more sensible interpretation of Section 381.493(3)(a) and its companion definition at Section 395.002(2) Florida Statutes, is that the legislature intended that abortion clinics, doctors' offices and dentists' offices, not be required to obtain certificates of need and licenses. Such heavy-handed regulation, given the history of attempted limits on abortion centers, would likely be unconstitutional. See Roe v. Wade, 410 U.S. 113 (1973) and Doe v. Bolton, 410 U.S. 179 (1973).

    
    

43. Just as San Marco, as a pre-existing abortion center, is not precluded from a certificate of need, neither is it automatically entitled to one. Petitioner's claim of entitlement based on the policy of HRS in PDCF Policy Memorandum #7 (Petitioner's Exhibit #16) is misplaced. Paragraph 6 of that memorandum provides:

    
    

    If "pre-existing clinics["], which have been performing surgical procedures similar to those proposed to be performed in the applicant's facility, seek licensure as ambulatory surgical facilities, they must document that the facility has been operating profitably, and has performed a sufficient number of

    • procedures to exceed the calculated

    • breakeven level of operation. Special

    • consideration will be given to approval of the project, after assuring that all

    • other appropriate criteria are satisfied. An architectural review will be conducted to verify that the existing facility meets, or will be capable of meeting, licensure requirements.

    
    

44. In a rule-challenge proceeding under Section 120.56 Florida Statutes, Hearing Officer, Robert Benton II, found Policy Memorandum 7 an invalid exercise of delegated legislative authority. See Visual Health and Surgical Center of the Palm Beaches v. HRS and HCA Health Services of Florida, Inc., 7 FALR 5185 (final order entered October 29, 1985). In order to be applied as non-rule policy, the "existing facility exception" must be fully explicated in a Section

    120.57 proceeding. HRS certainly was not advancing the application of the policy in this case, and the cross-examination of Reid Jaffe by San Marco fell far short of "application". It is unclear, for example, whether a "pre-existing clinic" could be a doctors office; if not, what could it be? "Similar procedures" was likewise undefined, but under a reasonable interpretation most procedures proposed for the San Marco facility are highly dissimilar to abortions. (e.g. hernia repairs, hand surgery, face lifts, etc. See CON application, p 40).

    
    

45. Review of San Marco's application is subject to the criteria found in Section 381.494(6)(c), Florida Statutes and implementing rules at 10-5.11(1) through (12), Florida Administrative Code. Rules have not been adopted to specifically address ambulatory surgical centers. By stipulation, the parties have agreed that the criteria in Subsections 381.494(6)(c) 5., 6., 10 and (d) are not applicable. As to the criteria in subsection 381.494(6)(c)8., the parties have agreed that an adequate labor pool for staffing exists, services will be accessible for training purposes and the facility will be geographically available to all residents of Duval County. See Prehearing Stipulation filed October 25, 1985. No evidence was presented addressing the criteria in Subsection 381.494(6)(c) 7, and 11., and those criteria are deemed irrelevant in this proceeding. The remaining criteria are addressed in the following general categories in accordance with the evidence presented at the hearing:

    
    

    The State and Local Health Plans and Long-Range Plans of the Facility

    
    

    (Section 381.494(6)(c) 1., Florida Statutes and Rule 10-5.11(1) and (2), Florida Administrative Code).

    
    

46. The state health plan is neutral on need for additional ambulatory surgical centers. The local health plan is unequivocal: none should be added at present. The application is therefore inconsistent with the local plan. The need methodology posited by San Marco's expert is consistent with the local plan's adoption of sub-area boundaries in planning for ambulatory surgery services. The facility's long-range plan is reflected in the CON application. They are one and the same thing. (See CON application, p. 40).

    
    

    Existing Facilities and Services

    
    

    (Section 381.494(6)(2) 2. and 4., Florida Statutes, and Rule-10-5.11(4) and (16), Florida Administrative Code.

47. These criteria require review of the availability and appropriateness of like services and alternative services. Evidence of the capacity of hospital operating rooms and hospital-based ambulatory surgery centers is relevant. Ambulatory centers, as those existing and planned for Memorial and Baptist, are very much like free-standing centers, although not the same. Non-dedicated operating rooms (those which are used for both in-patient and out-patient surgeries) are alternatives to free-standing centers, although a much less appropriate alternative for out-patients.

    
    

48. The motion in limine by San Marco was based in part on an agency final order in Surgical Services of Jacksonville v. Department of HRS, 7 FALR 2104, (final order entered March 28, 1985). In that case, the recommended conclusions of law adopted for the agency included conclusions relating to the distinctions between free-standing units and hospital-based units. Those conclusions are not the final word as to HRS policy in reviewing ambulatory surgery center applications against the availability of hospital-based operating rooms. Even in that case the need methodology utilized by the agency considered out-patient procedures conducted in hospitals and projected a continuation of those procedures. Surgical Services, Supra., p. 2119. In a later similar case, HRS utilized the same methodology and found no need for an additional free-standing surgical facility in Hillsborough County. See Surgicare III v. HRS and Humhosco, Inc., 7 FALR 3282 (final order entered June 18, 1985).

    
    

49. San Marco's own need expert utilized a methodology which considered surgeries in dedicated operating rooms, and to a much lesser degree, also in

    non-dedicated operating rooms. With a few adjustments, addressed in Findings of Fact, paragraphs 12-15 above, Dr. Fagin's methodology is adopted as the most rational and most consistent with the evidence in this case. That methodology,' witch the conservative assumption that annual capacity is only 1300 cases per year, reflects a surplus of ambulatory surgery rooms in Subdistrict A. At least through 1988, appropriate existing like facilities and appropriate alternative facilities will meet and exceed the need for ambulatory surgical rooms.

    
    

    Quality of Care Section 381.494(6)(c) 3, Florida Statutes.

50. Petitioner adequately proved this criteria will be met in its proposed facility.

    
    

    Accessibility

    
    

    Section 381.494(6)(c) 8, Florida Statutes and Rule 10- 5.11(11), Florida Administrative Code.

    
    

51. The evidence was weak as to any potential targeting of services to Medicaid and Medicare patients. Economic accessibility to elective surgery procedures could be stimulated by the lower-than-hospital fees at San Marco.

    The reverse could also occur however, to the extent that the even lower fees for procedures in doctors offices become less available.

    
    

    Capital Costs and Financial Feasibility

    
    

    Section 381.494(6)(c) 8.,9. and 13., Florida Statutes and Rule 10-5.11(5) and (12), Florida Administrative Code.

52. The conclusion by HRS that there appears to be an insufficient number of projected procedures to allow the facility to be viable was based upon the confused and mistaken assumption that revenues from the abortion center and San Marco could not appropriately be combined. They can, as concluded in paragraph 3, above. San Marco's evidence was based upon combined revenues and demonstrated ample resources to continue the operation of the facility. San Marco has met its burden of proving these criteria have been met.

    
    

    Effect on Competition

    
    

    Section 381.494(6)(c) 12, and Rule 10-5.11(4), and (12)(6), Florida Administrative Code.

    
    

53. Since the proposed facility is expected to remain viable and to perform surgical procedures other than its current D & Es, those procedures will be drawn either from an unmet need pool or from facilities which are performing them now. There is no unmet need pool, thus fewer procedures will occur in hospitals, other free-standing centers, or doctors' offices, and the facilities and health care consumers collectively will suffer adverse economic impact. The extent of the impact on any individual facility is too speculative to address. However, as to the two hospital intervenors in this ease, the impact is found to be de minimis.

    
    

54. The certificate of need program promotes the maintenance of a delicate balance between the elimination of unnecessary duplication of health services on one hand, and the strengthening of competitive forces in the industry on the other. See the legislative intent stated in Section 381.493(2), Florida Statutes. In this case the substantial weight of evidence demonstrated that competition was strengthened by the introduction of a free-standing ambulatory surgery center to the community, yet the ambulatory surgical market has since reached its saturation point and additional centers would be a wasteful drain on health care resources.

    
    

    Standing of Intervenors

    
    

55. At the close of Respondent's and Intervenors' case, San Marco moved for a "directed verdict against Memorial and Baptist for failure to establish standing". (T-1182-1183) The motion addresses the evidence rather than pleadings by the intervenors and no opposition was made at any time to the participation of the two hospitals in this proceeding. As addressed above, these individual hospitals proved no more than a de minimis impact, economic or otherwise, and to that extent failed to establish standing. This result, however, does not compel a "verdict" for petitioner, nor does it in practical terms affect the recommended outcome of this case.

    
    

56. Petitioner has failed to prove need for the additional ambulatory surgical services it seeks to provide.

RECOMMENDATION

Based on the foregoing, it is recommended that Certificate of Need #3304 be denied.

DONE and ORDERED this 2nd day of April, 1986, in Tallahassee, Florida.

MARY CLARK

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 2nd day of April, 1986.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 84-3712

The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner

1. Adopted in substance in paragraph 3.

2. Adopted in paragraph 1.

3. Adopted in substance in paragraph 2.

4. The surgical procedures are summarized by category in paragraph 3.

5. Adopted in substance in paragraphs 2, 16 and 24.

6. Rejected as cumulative and unnecessary.

7. Adopted in substance in paragraphs 16 and 19.

8. Adopted in substance in paragraphs 25 and 26. The statement of John Anderson's testimony is unnecessary,

9. Rejected as cumulative and unnecessary.

10. Adopted in substance in paragraph 26.

11. Rejected as cumulative and unnecessary.

12. Substantially adopted as summarized in paragraph 26.

13. Adopted in part in paragraph 23, otherwise rejected as unnecessary.

14. Adopted in part in paragraph 23, otherwise rejected as unnecessary.

15. Adopted in part in paragraph 23, otherwise rejected as unnecessary.

16. Adopted in substance in paragraph 12 and 21.

17. Adopted in substance in paragraph 12, 13 and 21.

18. Adopted in substance in paragraph 13.

19. Adopted in substance in paragraph 13.

20. Adopted in substance in paragraph 4.

21. Adopted in substance in paragraph 5.

22. Adopted in part in paragraph 5, otherwise rejected as unnecessary.

23. Rejected as irrelevant and unnecessary.

24. Adopted in paragraph 20.

25. Rejected as irrelevant.

26. Rejected as explained in paragraph 22.

27. Rejected as unnecessary.

28. Policy memorandum #7 is addressed in Conclusion of Law No. 3; otherwise this is rejected as a finding of fact.

29. Rejected as unnecessary.

30. Rejected as repetitive.

31. Adopted in substance in paragraph 24 and 26.

32. Adopted in substance in paragraph 21.

33. Adopted in paragraph 9.

34. Rejected as cumulative.

35. Adopted in paragraph 9, otherwise rejected as contrary to the weight of evidence or unnecessary.

36. Adopted in part in paragraph 29, otherwise rejected as unnecessary.

37. Adopted in substance in paragraph 28.

38. Rejected as cumulative and unnecessary.

39. Rejected as cumulative and unnecessary.

40. Adopted in substance in paragraph 28.

41. Adopted in paragraph 28.

42. Adopted in part in paragraph 28, otherwise rejected as cumulative and unnecessary.

43. Rejected as cumulative and unnecessary.

44. Adopted in paragraph 29 as to the profit of $10 million dollars, otherwise rejected as unnecessary.

45. Rejected as cumulative and unnecessary.

46. Rejected as cumulative and unnecessary.

47. As addressed in conclusions of law #10 and #11, the impact on Baptist was found to be minimal and insufficient to support "standing".

48. Adopted in paragraph 10.

49. Rejected as unnecessary.

50. Rejected as unnecessary.

51. Adopted in substance in paragraphs 10 and 11.

52. Rejected as cumulative and unnecessary.

53. Rejected as cumulative and unnecessary.

54. Rejected as cumulative and unnecessary.

55. Rejected as cumulative and unnecessary.

56. Rejected as cumulative and unnecessary.

57. Adopted in substance in paragraph 11.

58. Rejected as cumulative and unnecessary.

59. Rejected as cumulative and unnecessary, except as to the apples/oranges analogy, which is adopted in paragraph 9.

60. Rejected as cumulative and unnecessary.

61. Rejected as cumulative and unnecessary.

62. Rejected as cumulative and unnecessary.

63. Adopted in paragraph 11.

64. Adopted in paragraph 10, as to the characterization of Dr. Fagin's testimony. Otherwise, rejected as summary of testimony rather than findings of fact. The adoption of 40 percent as reasonable is found in paragraph 12.

65. Rejected as contrary to the weight of the evidence.

66. HRS Need Methodology is rejected in paragraph 10.(b) and paragraph 12 as being less reasonable than Petitioners' experts methodology.

67. Rejected as essentially argument, rather than findings of fact.

68. Rejected as contrary to the weight of evidence.

69. Rejected as repetitive.

70. Adopted in substance in paragraph 33 and Conclusion of Law #3.

71. Rejected as argument unsupported by the weight of evidence.

72. Rejected. See paragraph 7 for discussion of State Health Plan.

73. Rejected as argument, rather than finding of fact.

74. No paragraph of this number is found in Petitioner's Proposed Findings of Fact.

75. Adopted in Conclusions of Law, paragraph 4.

    Rulings on Joint Proposed Findings of

    Fact Submitted by the Respondent and Intervenors.

    
    

    (Note, the numbers in the left column conform to the numbering of the joint proposed findings)

    
    

    1. 1. Adopted in substance in paragraph 1, 2 and 3.

       1. Adopted in paragraph 6.

       2. Adopted -In paragraph 4.

       3. Adopted in paragraph 5.

1. 1. Adopted in paragraph 7.

   1. Adopted in paragraph 8.

   2. Rejected as irrelevant.

   3. Adopted in part in paragraph 8, otherwise rejected as unnecessary.

   4. Rejected as irrelevant.

   5. Adopted in substance in paragraph 10(b).

   6. Rejected as contrary to the weight of the evidence.

   7. Adopted in part in paragraph 10, otherwise rejected as unnecessary.

   8. Rejected as a re-statement of testimony, rather than finding of

      fact 10.c.

      
      

   9. Description of Mr. Swartz' methodology is provided in paragraph

      
      

   10. Rejected as irrelevant.

   11. Rejected as irrelevant.

   13 - 21. Rejected as unnecessary.

   1. Adopted in substance in paragraph 10.

   2. Rejected as unnecessary.

   3. Rejected as contrary to the weight of evidence, except as

      reflected in paragraph 10.

   4. Adopted in part in paragraph 10.b., otherwise rejected as unnecessary.

      25A. Adopted in part in paragraph 10, otherwise rejected as unsubstantiated by competent substantial evidence.

   5. Adopted in part in paragraph 10, otherwise rejected as unnecessary.

   6. Adopted in part in paragraph 22 and 23, otherwise rejected as unnecessary.

2. 1. Adopted in substance in paragraph 31.

   1. Adopted in substance in paragraph 31.

   2. Rejected as contrary to the evidence by considering all uncontroverted testimony and evidence describing the facility.

   3. Adopted in part in paragraph 32 and 33, otherwise rejected as irrelevant.

   4. Adopted in part in paragraph 32 and 33, otherwise rejected as irrelevant.

   5. Rejected as contrary to the weight of the evidence.

   6. Adopted in part in paragraph 31, 32 and 33, otherwise rejected as irrelevant.

   7. Rejected as irrelevant.

   8. Rejected as contrary to the weight of the evidence.

3. 1. Rejected as unnecessary.

   1. Rejected as argument that is unnecessary or unsupported by competent substantial evidence.

   2. Adopted in substance in paragraph 27.

4. 1. Rejected as cumulative.

   1. Rejected as cumulative.

   2. Rejected as unnecessary.

   3. Adopted in part in paragraph 4, 5 and 10, otherwise, rejected as unnecessary.

   4. Adopted in substance in paragraph 9.

   5. Adopted in substance in paragraph 9.

   6. Adopted in part in paragraph 4 and 5, otherwise rejected as unnecessary.

   7. Rejected as cumulative.

   8. Addressed in Conclusion of Law 6.

5. 1. Adopted in paragraph 17.

   1. Rejected as irrelevant.

   2. Rejected as irrelevant.

6. 1. Rejected as cumulative.

   2. Rejected as mere re-statement of testimony rather than a finding

   of fact.

   
   

7. 1.

8. 1.

9. 1.

10. 1. Adopted in paragraph 20.

    1. Adopted in part in paragraph 24, otherwise rejected as irrelevant

       or contrary to the weight of evidence.

    2. Rejected as irrelevant.

11. 1. Adopted in part in paragraph 26, otherwise rejected as irrelevant.

    1. Adopted in paragraph 24.

    2. Rejected as irrelevant.

12. 1. Addressed in Conclusion of Law 4.

13. 1. Addressed in Conclusion of Law 4.

14. 1. Rejected as unnecessary argument.

    1. Adopted in part in paragraph 27, otherwise rejected as unnecessary.

    2. Rejected as the description of an exhibit and characterization of testimony.

    3. Adopted in part in paragraph 30, otherwise rejected as unnecessary.

15. 1. Adopted in paragraph 24.

COPIES FURNISHED:

William J. Page, Jr., Secretary Department of HRS

1323 Winewood Blvd.

Tallahassee, Florida 32301

Steve Huss, Esquire General Counsel Department of HRS 1323 Winewood Blvd.

Tallahassee, Florida 32301

Chris H. Bentley, Esquire William E. Williams, Esquire Jeannette Andrews, Esquire Post Office Box 1739 Tallahassee, Florida 32302

Douglas Mannheimer, Esquire Richard Power, Esquire Post Office Drawer 11300 Tallahassee, Florida 32302

Michael J. Dewberry, Esquire Christopher Hazelip, Esquire 1300 Gulf Life Drive Jacksonville, Florida 32207

1. Robert Meek, Esquire Post Office Box 240 Jacksonville, Florida 32201

   
   

   =================================================================

   AGENCY FINAL ORDER

   =================================================================

   
   

   STATE OF FLORIDA

   DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

   
   

   
   

   SAN MARCO SUGI-CENTER, LTD.,

   
   

   Petitioner,

   CASE NO. 84-3712

   vs. CON NO. 3304

   
   

   DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

   
   

   Respondent,

   and

   
   

   MEMORIAL MEDICAL CENTER OF JACKSONVILLE, INC., d/b/a MEMORIAL MEDICAL CENTER; SOUTHERN BAPTIST HOSPITAL OF FLORIDA, INC., d/b/a BAPTIST MEDICAL CENTER,

   
   

   Intervenors.

   /

   
   

   FINAL ORDER

   
   

   This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above- styled case submitted a Recommended Order to the Department of Health and Rehabilitative Services (HRS). A copy of that Recommended Order is attached hereto. Exceptions to the Recommended Order were filed by Petitioner, Respondent, Memorial Medical Center and Baptist Medical Center.

   RULING ON EXCEPTIONS

   
   

   1. Paragraphs 7, 8, the last full unnumbered paragraph in No. 9, 10, 14, 15, the last sentence in 22, and the last sentence in 27 of the findings of fact in the Recommended Order are based upon competent substantial evidence. If, indeed, Medivision has forfeited its CON (and there is no evidence of that fact in the record) available procedures will become the subject of future, not earlier applications. The proper application of HRS PDCF Policy Memorandum No.7 does not require approval where the other appropriate criteria are not satisfied. HRS is in agreement with the first three sentences of paragraph 5 of the Conclusions of Law, and with paragraphs 6, 8, 10, 12 of the Conclusions of Law. San Marco's exceptions are denied.

      
      

   2. DHRS and Intervenor's exceptions are granted.

FINDINGS OF FACT

The findings of fact contained in the recommended order are adopted and incorporated herein as though fully set forth.

CONCLUSIONS OF LAW

Based upon the foregoing, the Conclusions of Law contained in the Recommended Order are adopted and incorporated herein except conclusions of law number 11 is amended to read:

"At the close of respondent's and intervenors' case, San Marco moved for a

`directed verdict against Memorial and Baptist for failure to establish standing'. (T 1182- 1183). The motion addresses the evidence rather than pleadings by the intervenors and no opposition was made at any time to the participation of the two hospitals in this proceedings. Further, intervenors are existing providers of similar services in the same proposed service area of petitioner, and thus are entitled to party status as an intervenor. See South Broward Hospital District v.

Department of Health and Rehabilitative Services, So.2d , 11 F.L.W. 582 (Fla. 1st DCA 1986). This result, however, does not in practical terms affect the recommended outcome of this case."

Conclusions of law number 10 is amended to read: "Since the proposed facility is expected

to remain viable and to perform surgical

procedures other than its current D & E's, those procedures will be drawn either from an unmet need pool or from facilities which are performing them now. There is no unmet need pool, thus fewer procedures will occur in hospitals, other free standing centers, or doctors' offices, and facilities and health care consumers collectively will suffer adverse

economic impact. However, as to the two hospitals intervenors in this case, the impact is found to be de minimis." (emphasis omitted)

Based upon the foregoing, it is

ADJUDGED, that the application (CON 3304) for an ambulatory surgical center in Jacksonville, Duval County, Florida be DENIED.

DONE and ORDERED this 11th day of July, 1986, in Tallahassee, Florida.

WILLIAM J. PAGE

Secretary

Copies furnished to:

Douglas Mannheimer, Esquire Lesley Mendelson, Esquire Department of Health and Rehabilitative Services 1123 Winewood Boulevard Building One, Suite 407 Tallahassee, Florida 32301

Chris H. Bentley, Esquire William E. Williams, Esquire Post Office Box 1739 Tallahassee, Florida 32302

Michael J. Dewberry, Esquire Christopher Hazelip, Esquire 1300 Gulf Life Drive Jacksonville, Florida 32207

E. Robert Meek, Esquire Post Office Box 40 Jacksonville, Florida 32201

Information Copies:

Mary Clark (DOAH) Nell Mitchem (PDCFR)

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a copy of the foregoing was sent to the above-named people by U.S. Mail this 15th day of July, 1986.

R. S. Power, Agency Clerk Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407

Tallahassee, Florida 32399-0700 904/488-2381

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this final order is entitled to judicial review which shall be instituted by filing one copy of a notice of appeal with the agency clerk of HRS, and a second copy, along with filing fee as prescribed by law, with the district court of appeal in the appellate district where the agency maintains its headquarters or where a party resides. Review proceedings shall be conducted in accordance with the Florida appellate rules.

The notice of appeal must be filed within 30 days of rendition of the order to be reviewed

Docket for Case No: 84-003712

Orders for Case No: 84-003712