STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

OSTEOPATHIC MEDICAL CENTER ) OF OCALA, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 84-4072

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

and )

) MARION COMMUNITY HOSPITAL and ) BIG SUN HEALTH CARE SYSTEMS, ) INC., d/b/a MUNROE REGIONAL ) MEDICAL CENTER, )

)

Intervenors. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above- styled case on July 8-10, 1985, at Ocala, Florida, and on July 17, 1985, at Tallahassee, Florida.

APPEARANCES

For Petitioner: David W. Mernitz, Esquire

1030 Merchants Plaza, East Tower Indianapolis, Indiana 46204

and

E. G. Boone, Esquire and Stephen K. Boone, Esquire Post Office Box 1596 Venice, Florida 34284

For Respondent: Douglas L. Mannheimer, Esquire

Post Office Drawer 11300 Tallahassee, Florida 32302-3300

For MRMC: Michael J. Cherniga, Esquire

Post Office Drawer 1838 Tallahassee, Florida 32302

For MCH: Donna H. Stinson, Esquire

118 North Gadsden Street, Suite 100 Tallahassee, Florida 32301

By Petition dated November 1, 1984, Osteopathic Medical Center of Ocala, Inc.(OMCO), a subsidiary of Basic American Medical, Inc.(BAMI), contests the denial by the Department of Health and Rehabilitative Services (DHRS) of its application for a certificate of need (CON) to construct and operate a 120-bed acute care osteopathic hospital in Ocala, Florida. Subsequently, Munroe Regional Medical Center (MRMC) and Marion Community Hospital (MCH) were allowed to intervene in opposition to the grant of the requested CON.

At the hearing Petitioner called 15 witnesses, the depositions of three additional witnesses were admitted as exhibits, Respondent called one witness, MRMC called five witnesses, MCH called four witnesses, and 28 exhibits were offered into evidence. All were admitted except Exhibit 1, which is an amended application for a CON that was not filed with DHRS at the time it was offered into evidence or during the course of this hearing. Exhibit 28 is a late-filed exhibit, the deposition of Dr. Panzer.

Subsequent to the conclusion of the hearing, Petitioner noticed the taking of the deposition of John M. Hutchens, a witness who testified in these proceedings, to be submitted in rebuttal. The other parties objected and a telephone conference call was held to resolve this matter. Objections to this testimony was sustained on two grounds. Time for the submission of this witness' rebuttal testimony expired on July 10, 1985, when the hearing was completed but for the taking of the testimony of the two Tallahassee witnesses and the deposition of Dr. Panzer. All parties were so advised before the Ocala portion of the hearing was concluded. Secondly, late-filed exhibits are admitted only upon stipulation of all parties as no opportunity to object to the late-filed exhibit is thereafter available. The other parties objected to this proposed deposition. That testimony has been proffered by Petitioner in the form of a deposition. As such, if received, it becomes a part of the record but is not recognized as evidence in this case.

Proposed findings and conclusions of law have been submitted by the parties. To the extent that those findings are included herein they are adopted; otherwise, they are rejected as not supported by the evidence, cumulative, mere recitation of the testimony of witnesses, immaterial, or unnecessary to the conclusions reached. Proposed conclusions of law, to the extent not included herein, are rejected.

FINDINGS OF FACT

1. Petitioner, OMCO, is a corporation formed by Basic American Medical, Inc.(BAMI), to apply for a certificate of need (CON) to construct and operate a 120-bed acute care osteopathic hospital in Ocala, Florida. Petitioner is incorporated with 1,000 authorized shares with a par value of $1.00 per share. All shares of OMCO are controlled by BAMI pending issue. To obtain local support for the application, BAMI has offered local investors, principally doctors, the opportunity to purchase ten shares each at par value conditioned upon the issuance of a CON to OMCO. Up to 20 percent of the stock is proposed to be issued to 20 such investors (Exhibit 3). At the time of the hearing 10 percent of the stock had been issued to ten doctors, each of whom paid BAMI

   $10.00.

   
   

2. Financing of the project is to be arranged by BAMI and, although BAMI is prepared to provide in excess of $1 million for initial construction and $1 million for start-up operating expenses, the entire cost of the project is intended to be funded with long-term financing. Arrangements for this financing is to be handled by Century Mortgage Corp., a wholly owned subsidiary of BAMI.

   Century Mortgage Corp. offered to provide $9 million at 12.5 percent for 25 years and $3.6 million at 13.5 percent for 8 years, for equipment, but proposes to serve only as a broker between OMCO and the investors who advance the money.

   
   

3. BAMI corporate officers testified that Marion County was selected as the site for the proposed hospital because the state acute care bed methodology rule indicates there is a need for additional acute care beds in Marion County. No need for osteopathic hospital beds was determined but the application was submitted for an osteopathic hospital because, under Florida law, it was believed easier to get a CON for an osteopathic hospital than for an allopathic hospital.

   
   

4. One of these investors, Sheldon Katanick, D.O., is a resident of Michigan who is contemplating a move to the Ocala area. Dr. Katanick is a radiologist but is currently on the staff at no hospital. He would prefer to practice at an osteopathic hospital rather than at an allopathic hospital because "There are procedures I might want that wouldn't be carried out at an allopathic hospital." No further identification of these procedures was given. As a radiologist Dr. Katanick would admit fewer patients than he would if he were in general practice. He estimates that he would admit five to ten patients per month if the application is approved and he moves to Ocala and establishes a practice.

   
   

5. Arthur Paraiso, M.D., lives in Bellview, some ten miles south of Ocala, and is also an investor in OMCO. He has never served on the staff of an osteopathic hospital but would have no objection to serving on such a staff and will serve if the hospital is built. Paraiso is currently on the staff of no hospital. He recently resigned from the staff of Munroe Regional Medical Center because he "didn't like the atmosphere." He was told to resign from the staff of another hospital which was not identified. He has approximately 1,000 active patients but has no idea how many of these patients he would admit to the proposed hospital.

   
   

6. Ronald E. Shelley, D.O., has operated the Bellview Medical Center for

   16 years as sole practitioner. Although he has served on the staff of allopathic hospitals in the past, he is currently on the staff of no hospital. He considers the commuting from Bellview to Ocala (ten miles) to be difficult and prefers to refer his patients needing hospitalization to a doctor admitted to the staff at one of the Ocala hospitals. Also, he considers it difficult for a sole practitioner to serve on the staff of a hospital without being covered by another practitioner in his office. Shelley sees up to 60 patients per day in the winter season and approximately 40 patients per day during the summer. Most of the patients he has hospitalized go to an Ocala hospital but occasionally he sends patients to an osteopathic hospital in Orlando. Dr. Shelley is also a stockholder in OMCO and is on the board of directors. He is president of District Twelve Osteopathy Group, which has 25 members located throughout District Three, the health planning district in which Marion County is located.

   
   

7. Robert M. Corbett, D.O., supports the application to construct an osteophathic hospital at Ocala. He operates two emergency walk-in clinics, one at Crystal River, Florida, and one at Ocala, Florida. He holds staff privileges at Seven Rivers Community Hospital in Crystal River and consulting privileges at Marion Community Hospital, which authorizes him to admit a limited number of patients to this hospital each year. Emergency clinics are staffed with four DO's and two MD's. Generally, the clinics treat emergency patients, and if one of these patients needs to be hospitalized the clinic refers the patient to a doctor on the staff of the appropriate hospital for admission. Dr. Corbett and

   the other doctors manning the emergency walk-in clinics do not have time to run the clinics and monitor patients in the hospital at the same time; hence, the referrals to another doctor for admission. Dr. Corbett did not testify he would change his mode of operation of referring patients for hospitalization and personally admit patients if an osteophathic hospital opened in Ocala.

   
   

8. Robert Panzer, D.O., testified by deposition submitted after the final hearing date. Dr. Panzer has been practicing osteopathy in the Ocala area for approximately eight years and has about 5,000 active patients, of which six to ten are normally hospitalized. He admits all of his patients through M.D. specialists. He applied for and was accepted on the staff of Munroe Regional Medical Center, but never exercised the privileges granted. Panzer testified that he was told by a staff member at an Ocala hospital that he could not do manipulation of patients in the hospital; but, on cross-examination, he could not recall who told him that.; Dr. Panzer also has patients from outside Marion County. If this osteophathic hospital is authorized, Fanzer would join the staff and admit patients. He is one of the ten local investors and has been elected to the board of directors of the proposed hospital by the other investors.

   
   

9. Other than the testimony of Dr. Panzer that he could not practice manipulation at a local hospital, no testimony was presented that any osteopathic patient is unable to obtain adequate treatment at existing facilities in Marion County, that existing hospitals refuse to admit osteopathic physicians to their staffs, or that there is any unmet need for osteophathic treatment in Marion County. There is no osteopathic hospital in District Three, which includes Marion County and 15 other surrounding counties. In District Three there are approximately 25 osteopathic physicians; in Marion County there are eight, of which only two, including Panzer, have applied for staff privileges at a Marion County hospital.

   
   

10. Considerable testimony was presented that once an osteopathic hospital is built additional osteopathic physicians will move to the area, will build up practices, and utilize the facilities provided. Only general historical data from other counties was presented to support this position. In those counties cited the population is more urban than is Marion County and District Three population. Except for one hospital in Palm Beach County, osteopathic hospitals in Florida have a lower occupancy rate than do allopathic hospitals.

    
    

11. Most DO witnesses emphasize the holistic approach to the patient taken by the osteophathic physician in his treatment as compared to the treatment of the specific illness used by an allopathic physician and to the fact that greater use of manipulative therapy is used in the practice of osteopathic medicine than in the practice of allopathic medicine. Otherwise, all witnesses generally agreed that the physical facilities provided at an acute care hospital are identical at allopathic and osteopathic hospitals. A bed in an allopathic hospital is indistinguishable from a bed in an osteopathic hospital and the primary difference between the two practices results from the philosophical approach to medicine each takes. As a result, patients of osteopathic physicians receive more physical therapy treatment than do patients of allopathic physicians albeit by use of identical equipment. Plans and cost estimates for the proposed hospital, including equipment, are taken largely from an allopathic hospital recently opened by BAMI at Kissimmee, Florida.

    
    

12. The implementation of the Diagnostic Related Groups (DRG's) by the Federal Government for Medicare patients and greater emphasis and growth of Health Maintenance Organizations (HMO's) and Preferred provider Organizations

    (PPO's) which have occurred during the past year have coincided with a major reduction in the usage rate of hospital beds in the subdistrict of Marion County as well as throughout the State of Florida and the United States. For reasons generally attributed to actions intended to reduce the cost of medical treatment, patient days and hospital occupancy rates have been materially reduced and if current trends continue substantial rate increases will be needed to keep many hospitals solvent. This factor is affecting the existing 15 osteopathic hospitals in Florida at the same or greater rate than it is affecting the allopathic hospitals.

    
    

13. Although Gulf Coast Hospital v. DHRS, 420 So.2d 86 (Fla. 1st DCA 1982), indicates the acute care bed need rule, 10 5.11(23), F.A.C., is not applicable to determining need for osteopathic hospital beds, Petitioner uses this rule to show a need for acute care beds exists in Marion County. Because the acute care bed rule is partly based on a 1978 statewide use rate to determine need, the methodology overstates the need for new beds. Since 1978 the use rate has decreased throughout the state but the rule has not been modified to reflect this reduction in use rate.

    
    

14. District Three, the 16-county area including Marion County, has a need for acute care beds in 1990 (the target year for this application) of 191.

    Using the 1984 use rate, Marion County will have a need for 87 acute care beds in 1990. The Health Planning council for District Three has recommended that 15 percent of the district bed need should be set aside for Levy, Dixie, and Gilchrist Counties, which have been determined to be underserved. This reduces the potential allocation of beds to Marion County to 74. As a general rule CON's for less than 100 bed hospitals are not granted because those hospitals tend to be less cost-effective than are larger hospitals offering the same services.

    
    

15. Absent a bed need methodology for osteopathic hospitals, DHRS developed two methodologies to determine need for osteopathic hospital beds. The first methodology divides the number of admissions to osteopathic hospitals in each county in 1984 by the number of doctors of osteopathy in the county to

    arrive at an admission rate per DO. This is multiplied by the average length of stay (ALOS) to arrive at the number of patient days per DO. Averaging the patient days per 1,000 population for these osteopathic hospitals in the southern Florida counties in which osteopathic hospitals are located gives an average of 63.3 patient days per 1,000 population in these counties. Applying this figure to the population of Marion County in 1990, the five year planning horizon used to determine the hospital bed need, shows approximately 41 osteopathic beds will be needed in Marion County in 1990 (Exhibit 9).

    
    

16. The second approach which is not really a bed need methodology as much as a check on the requested beds is to determine from the same historical data the number of DO's needed to support a 120-bed hospital. That figure is calculated to be 91 (Exhibit 9).

    
    

17. Methodologies proposed by OMCO's expert witnesses rely heavily on the acute care bed need methodology established by Rule 10-5.11(23), F.A.C. although the courts have held that this methodology is not applicable to osteopathic hospitals because of the language of Section 381.494(2), Florida Statutes, which requires "The need for such facilities shall be determined on the basis of the need for and the availability of osteopathic services and facilities in the community." Further, Petitioner attempts to justify the need for an osteopathic facility in District Three, which has no osteopathic hospital, on the basis of the population of the district as a whole despite the long distances involved in

    this 16-county area. Obviously, people in the extreme northwestern part of this district are unlikely to use the proposed facility in Ocala in view of much nearer acute care hospital beds. Only a hospital offering those services provided by a regional medical center can expect to have a districtwide service area. Here, OMCO proposes to provide only basic acute care facilities and few patients could be expected from beyond the primary service area of Marion County.

    
    

18. With the current decline in hospital occupancy rate, the introduction of a new hospital in Marion County will have an adverse impact on existing hospitals since patients that would be admitted at OMCO would generally come from those patients that otherwise would use MCH or MRMC. This would serve to reduce even further those hospital occupancy rates and adversely affect the ability of MRMC to serve indigent patients.

    
    

19. Because of the declining occupancy rates in all hospitals and the generally lower occupancy rates at osteopathic hospitals in Florida, the financial feasibility of the project is questionable despite OMCO's witnesses who attested to the financial feasibility of the project. The estimates on which these opinions of financial feasibility are based are not realistic and do not incorporate the latest data on occupancy rates for the calendar year 1984 which were available, albeit not in final published form, at the time of the hearing. Evidence presented for those completed months of 1985 indicates the occupancy rates are further declining in the Marion County hospitals in 1985.

    
    

20. OMCO proposes to serve as a teaching hospital and presented witnesses who so testified. Before a hospital can serve as a teaching hospital, it must meet certain qualifications, such as having as heads of all departments DO's who meet specific requirements, and thereafter be certified as a teaching hospital by the American Osteopathic Association. While it is certainly possible for OMCO to meet these requirements and be so certified, it is speculative to say at the present time that such certification will be obtained. Evidence of need for additional teaching hospitals was submitted only by objected-to hearsay testimony not corroborated by admissible evidence. Accordingly, need for additional osteopathic teaching hospitals was not shown.

    
    

21. None of the other criteria of Section 381.494(6)(c)1 13, Florida Statutes, are of sufficient comport to justify denial of this application if a need for the proposed facility had been demonstrated. Absent a showing of need, further discussion of these criteria is not deemed warranted or necessary to the findings.

    
    

    CONCLUSIONS OF LAW

    
    

22. The Division of Administrative Hearings has jurisdiction over the parties to, and subject matter of, these proceedings.

    
    

23. Gulf Coast Hospital, Inc. v. DHRS, 424 So.2d 86 (Fla. 1st DCA 1982) was cited by Petitioner throughout the hearing as the basis upon which this CON was sought. In Gulf Coast, supra, the court stated at P. 91:

    
    

    Certificates of need for osteopathic hospitals are subject to the same myriad of requirements, including financial feasibility, which pertains to other facilities licensed by HRS.

24. Those criteria are contained in Section 381.494(6)(c)1-13. The first of these is:

    
    

    The need for the health care facilities and services and hospices being proposed in relation to the applicable district plan and state health plan adopted pursuant to Title XV of the Public Health Service Act.

    
    

25. Unfortunately, the state health plan has no specific provision respecting need for osteopathic hospitals and it is incumbent upon Petitioner to prove, by a preponderance of the evidence, a need for the proposed facility. Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977).

    
    

26. Of those doctors of osteopathy who testified in support of the application, only two have applied for staff privileges at the Marion County hospitals. Both were admitted, yet neither has the time to take care of hospital patients. One of these doctors uses medical doctor specialists for all of his admissions and the other, who operates through emergency walk-in clinics, simply does not have the time to take care of patients at the clinics and at the hospital. Accordingly, he refers all his patients needing hospitalization to a medical doctor who has privileges at the desired hospital.

    
    

27. No evidence was submitted that any patient was ever refused osteopathic treatment at a Marion County hospital nor was testimony offered by any patient that existing facilities are unable or unwilling to provide treatment.

    
    

28. Petitioner here attempts to rely upon the acute cadre bed need rule, Rule 10-5.11(23), Florida Administrative Coded to demonstrate there is a need for additional acute care beds in Marion County. Section 381.494(2), Florida Statutes, establishes the criteria for granting certificates of need to construct and operate osteopathic facilities in stating:

    
    

    When an application is made for a certificate of need to construct or expand an osteopathic facility, the need for such facility shall be determined on the basis of the need for and availability of

    osteopathic services and facilities in the community.

    
    

29. "Community" as used in this statute is obviously intended to be the service area of the proposed facility and not simply the city of Ocala. Under no stretch of the imagination can the "community" be extended to the geographical boundaries of District Three. There are no osteopathic hospitals in District Three. Accordingly, pure osteopathic facilities are not available. This is not to say that osteopathic services are unavailable or that osteopathic services could not be provided in existing allopathic hospitals although, at present, DO's in Marion County admit very few patients to these or any other hospitals. From the testimony of OMCO's witnesses it would appear that Petitioner proposes to operate an acute care hospital to fill the perceived need for acute care beds in Marion County and elected to apply for a CON to construct an osteopathic facility because that was perceived to be easier to obtain than

    would be acute care beds in an allopathic setting. By showing some acute care bed need and no osteopathic facilities in District Three, Petitioner proposes to augment the few beds needed by filling the vacuum in osteopathic facilities.

    However, as noted above, Petitioner failed to show a need for osteopathic facilities in Marion County or in District Three.

    
    

30. This project is not financially feasible and will have an adverse impact on existing facilities providing similar services. OMCO's witnesses testified that the entire cost of the project is to be financed and that BAMI's wholly owned finance subsidiary proposes to act solely as the broker to bring the lenders together with OMCO. No specific commitment has been obtained from any lender to provide funds at an interest rate used in the pro forma calculations, and the pro forma occupancy rate is unrealistically high. All hospitals in Florida experienced decreasing occupancy rates between 1982 and 1984. The two hospitals opposing this application reported further declines in occupancy rates in 1985. Additionally, osteopathic hospitals have experienced lower occupancy rates than have allopathic hospitals in Florida, have suffered as great or greater declines in occupancy in the past two years, and any further declines in occupancy rates in Marion County, if extended to OMCO, will render this project financially not feasible. Most of the patients the proposed facility would get would be patients that otherwise would go to MCH or MRMC. Taking these patients during low occupancy periods will adversely affect MCH and MRMC.

    
    

31. One general rule applied by DHRS in determining need for additional facilities is that existing facilities be fully utilized before additional facilities are approved. For the purpose of this rule 80 percent occupancy constitutes full utilization. Applying this rule to Marion County would require existing hospitals operate at 80 percent utilization before a CON for an additional hospital would be granted. In 1984 both MCH and MRMC operated well below this optimum utilization. To date in 1985 MCMH is running at 60 percent occupancy.

    
    

32. From the foregoing it is concluded that OMCO has failed to prove, by a preponderance of the evidence, that a need exists in Marion County or in District Three for a 120-bed osteopathic hospital; that OMCO has failed to demonstrate that such a facility will be financially feasible; and that the proposed facility would adversely impact the cost of providing health care in Marion County. It is

RECOMMENDED that the application of Osteopathic Medical Center of Ocala, Inc., for a certificate of need to construct and operate a 120-bed acute care osteopathic hospital in Ocala, Florida, be denied.

ENTERED this 9th day of September, 1985, at Tallahassee, Florida.

K. N. AYERS 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 9th day of September, 1985.

COPIES FURNISHED:

E. G. Boone, Esquire Stephen K. Boone, Esquire 1001 Avenida del Circo Post Office Box 1596 Venice, Florida 34284

David W. Mernitz, Esquire Stark, Doninger, Mernitz & Smith

1030 Merchants Plaza, East Tower Indianapolis, Indiana 46204

Douglas L. Mannheimer, Esquire Culpepper, Turner and Mannheimer Post Office Drawer 11300

A Tallahassee, Florida 32302-3300

Donna H. Stinson, Esquire

Moyle, Flanigan, Katz, FitzGerald & Sheehan, P.A.

The Perkins House, Suite 200

118 North Gadsden Street Tallahassee, Florida 32301

Michael J. Cherniga, Esquire Roberts, Baggett, LaFace & Richard

101 East College Avenue Tallahassee, Florida 32302

David H. Pingree, Secretary Department of Health and

Rehabilitative Services 1321 Winewood Boulevard

Tallahassee, Florida 32301

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

AGENCY FINAL ORDER

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

STATE OF FLORIDA

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

OSTEOPATHIC MEDICAL CENTER OF OCALA, INC.,

Petitioner,

vs. CASE NO. 84-4072

CON 3338

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

Respondent,

and

MARION COMMUNITY HOSPITAL and BIG SUN HEALTH CARE SYSTEMS, INC., d/b/a MUNROE REGIONAL MEDICAL CENTER,

Intervenor.

/

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 were filed by

HRS and Osteopathic Medical Center of Ocala, Inc. (hereinafter OMCO). OMCO filed a Motion to Supplement their exceptions. Big Sun Health Care Systems, Inc., d/b/a Munroe Regional Medical Center (hereinafter MRMC) moved to strike exceptions filed by OMCO. OMCO filed a Response. ON EXCEPTIONS

1. Section 381.494(6)(c) Florida Statutes as amended by Chapter 84-543 Section 9 Laws of Fla. provides that the need for new osteopathic acute care hospitals ?shall be determined on the basis of the need for and availability of osteopathic services and osteopathic acute care hospitals in the district". Paragraph 17 quotes a portion of Section 381.494(6)(c) as it existed prior to amendment, and will be modified to show the current language in ac*

   
   

   *NOTE: The remainder of this sentence on the document filed with the Division is unreadable and therefore not available

   in this ACCESS document.

   
   

   Likewise the appropriate law will be applied in the Conclusions of Law. There is competent substantial evidence to support the Hearing Officer's findings and

   conclusions that OMCO has not established tide need for osteopathic acute care beds in Marion County, Florida MRS District 3. OMCO'S Exceptions 1, 2, 4 and 6 are denied. This conclusion is not changed by any change in the law because Petitioner has failed to prove need in either the community or the district.

   
   

2. There is competent substantial evidence supporting the finding that potential patients are likely to forego using the proposed facility in favor of closer, allopathic hospitals. OMCO's third exception is denied.

   
   

3. The need for osteopathic facilities is not to be evaluated based upon the bed need formula found in Chapter 10-5.11(23), F.A.C. South Dade Osteopathic Medical Center, Inc., d/b/a Suburban Medical Center (filed October 11, 1985, amended November 14, 1985).

   
   

4. If the non-rule policy osteopathic acute care hospital was so established that the same policy could be applied in each and every case, it could and should be promulgated as a rule. It is because it is emerging and still subject to change that it is still incipient agency policy, which carries an additional agency burden. The fact that there is no duly promulgated rule, however, in no way diminished the applicant's burden to prove entitlement. In this case, petitioner did not meet that burden. OMCO's 7th and 8th exceptions are denied.

   
   

5. There is absolutely no difference between an acute care "bed" located in an osteopathic acute care hospital and an acute care "bed" located in an allopathic acute care hospital. Paragraph 11 of the Findings of Fact contained in the Recommended Order is based upon competent substantial evidence. OMCO's 9th exception is denied.

   
   

6. The conclusion that the proposed facility will adversely impact the cost of providing health care is supported by the findings of fact which are based upon competent, substantial evidence. Patients to be served would necessarily not be served by existing facilities if they are served by the proposed hospital, thereby depriving the existing facilities of business it might otherwise enjoy. This is not to say that this consideration outweighs all others; rather it is one of many to be balanced by the agency. OMCO's 10th exception is denied.

   
   

7. The existence of, and occupancy rates at, allopathic acute care hospitals in the service district of the applicant can be relevant as pertaining to the criteria of the existence of like services found in Section 381.494(6)(c)2 and 12 Florida Statutes. The reality that, as a result of the implementation of DRGs, hospital occupancy rates are declining in all hospitals cannot be ignored when evaluating the need for either osteopathic acute care hospitals or allopathic acute care hospitals. However, no set percentage of occupancy is applied by HRS less than which new osteopathic acute care hospitals can be approved. For this reason, paragraph 10 of the Conclusions of Law will be stricken in accordance with HRS exception 3.

RULING ON MOTION

The Motion of OMCO to supplement its exceptions is denied. Absent an agreement to continue the hearing for the purpose of entertaining additional evidence, the APA does not permit a never ending processed. Florida Dept. of Trans. v. V.W.C. Co., Inc., Fla. App. 396 So.2d 778 (DCA 1st 1981). MRMC's

Motion to Strike Exhibit A and B of OMCO's exceptions is granted.

FINDINGS OF FACT

The Findings of Fact contained in the Recommended Order are hereby adopted and incorporated by reference with the following exception for the reasons set forth in the Ruling on Exceptions:

Paragraph 17 of the Findings of Fact is modified to read:

17. Methodologies proposed by OMCO's expert witnesses rely heavily on the acute care bed need methodology established by Rule 10-5.11(23), F.A.C. although the courts have held that this methodology is not applicable to osteopathic hospitals because of the language of Section 381.494(2), Florida Statutes, which requires "The need for such hospital shall be determined on the basis of the need for

and the availability of osteopathic services and osteopathic acute care hospitals in the district".

Further, Petitioner attempts to justify the need for an osteopathic facility in District Three, which has no osteopathic hospital, on the basis of the population of the district as a whole despite the long distances involved in this 16-county area.

Obviously, people in the extreme northwestern part of this district are unlikely to use the proposed facility in Ocala in view of much nearer acute care hospital beds. Only a hospital offering those services provided by a regional medical center

can expect to have a district wide service area. Here, OMCO proposes to provide only basic acute care facilities and few patients could be expected from beyond the primary service area of Marion County.

CONCLUSIONS OF LAW

The Conclusions of Law in the Recommended Order are adopted and incorporated herein by reference as though fully set forth with the following exception for the reasons set forth in the Ruling on exceptions:

Unnumbered paragraph 7 of the Conclusions of Law is modified to read:

Petitioner here attempts to rely upon the

acute care bed need rule, Rule 10-5.11(23), Florida Administrative Code, to demonstrate there is a need for additional acute care beds in Marion County. Section 381.494(2), Florida Statutes, establishes the criteria for granting certificates of need to construct and operate osteopathic facilities in stating:

When an application is made for a certificate of need to construct or to expand an osteopathic acute care hospital, the need for such hospital shall be determined on the basis of the need for and availability of

osteopathic services and osteopathic acute care hospitals in the district.

There are no osteopathic hospitals in District Three. Accordingly, pure osteopathic services are not available. This is not to say that osteopathic services are unavailable or that osteopathic services

could not be provided in existing allopathic hospitals although, at present, DO's in Marion County admit

very few patients to these or any other hospitals. From the testimony of OMCO's witnesses it would appear that Petitioner proposes to operate an acute care hospital to fill the perceived need

for acute care beds in Marion County and elected to apply for a CON to construct an osteopathic facility because that was perceived to be easier to obtain than would be acute care beds in an allopathic setting. By showing some acute care bed need and no osteopathic facilities in District Three, Petitioner proposes to augment the few beds needed by filling the vacuum in osteopathic facilities. However, as noted above, Petitioner failed to show a need for osteopathic facilities in Marion County or in District Three.

Based upon the foregoing, it is

ADJUDGED that the application of Osteopathic Medical Center of Ocala, Inc., for a Certificate of Need to construct and operate a 120-bed acute care osteopathic hospital in Ocala, Florida is DENIED.

DONE and ORDERED this 20th day of December 1985, in Tallahassee, Florida.

Secretary

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.

COPIES FURNISHED:

K. N. Ayers, Esquire Hearing Officer

Division of Administrative Hearings Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

E. G. Boone, Esquire Stephen K. Boone, Esquire 1001 Avenida del Circo Post Office Box 1596 Venice, Florida 34284

David W. Mernitz, Esquire

STARK, DONINGER, MERNITZ AND SMITH

1030 Merchants Plaza, East Tower Indianapolis, Indiana 46204

Douglas L. Mannheimer, Esquire CULPEPPER, TURNER AND MANNHEIMER

Post Office Drawer 11300 Tallahassee, Florida 32302-3300

Donna H. Stinson, Esquire

MOYLE, FLANIGAN, KATZ, FITZGERALD, AND SHEEHAN, P.A.

The Perkins House, Suite 200

118 North Gadsden Street Tallahassee, Florida 32301

Michael J. Cherniga, Esquire ROBERTS, BAGGETT, LaFACE & RICHARD

101 East College Avenue Tallahassee, Florida 32302

Docket for Case No: 84-004072

Orders for Case No: 84-004072