STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
ST. JOSEPH'S HOSPITAL, )
)
Petitioner, )
)
vs. )
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, ) CASE NO. 86-1542
)
Respondent, )
and )
) HUMANA OF FLORIDA, d/b/a TAMPA ) WOMEN'S HOSPITAL, UNIVERSITY ) COMMUNITY HOSPITAL, TAMPA ) GENERAL HOSPITAL and AMI TOWN ) AND COUNTRY MEDICAL CENTER, )
)
Intervenors. )
)
RECOMMENDED ORDER
The final hearing was held in this case on April 6-8, 20,21 and June 8-10, 1987 in Tallahassee, Florida, before Donald D. Conn, Hearing Officer, Division of Administrative Hearings. The parties were represented as follows:
Petitioner: Ivan Wood, Esquire
The Park in Houston Center 1221 Lamar Street, Suite 1400
Houston, Texas 77010
Respondent: Douglas L. Mannheimer, Esquire
Post Office Drawer 11300 Tallahassee, Florida 32302,
Theodore E. Mack, Esquire Department of Health and Rehabilitative Services 1323 Winewood Blvd.
Building One, Room 407 Tallahassee, Florida 32399-0700
Intervenors: James C. Hauser, Esquire
Post Office Box 1876 Tallahassee, Florida 32302 (Humana of Florida)
Cynthia Tunnicliff, Esquire Post Office Box 190 Tallahassee, Florida 32302 (University Community Hospital)
John Radey, Esquire
101 North Monroe Street, Suite 1000 Tallahassee, Florida 32302
(Tampa General Hospital)
Michael J. Cherniga, Esquire Post Office Drawer 1838 Tallahassee, Florida 32302
(AMI Town and County Medical Center)
The issue in this case is whether Certificate of Need (CON) application number 4288, submitted by St. Joseph's Hospital (St. Joseph's), should be approved by the Department of Health and Rehabilitative Services (Department), and thereby authorize St. Joseph's to open a 100 bed satellite hospital in the Carrollwood area of Hillsborough County through the transfer of 100 licensed and approved acute care beds from St. Joseph's main facility on West Buffalo Avenue in Tampa, Hillsborough County, to the new satellite hospital.
At the hearing, St. Joseph's presented the following witnesses: Sister Marie Celeste Sullivan, President of St. Joseph's Hospital; accepted as an expert in health care administration; Jan Parkinson, Director of Planning, St. Joseph's Hospital; Carolyn Vallone, Vice President of Patient Care Services, St. Joseph's Hospital, accepted as an expert in nursing and nursing administration; Enrique Marcet, accepted as an expert in health care architecture, design and planning; William Tapella, Vice President of Fiscal Services and Corporate Treasurer, St. Joseph's Hospital, accepted as an expert in health care finance and accounting; Tom Konrad, accepted as an expert in health care planning; and Barbara Myres-Fernandez, Vice President of Planning and Marketing, St. Joseph's Hospital, accepted as an expert in health care planning and marketing. In rebuttal, St. Joseph's presented the additional testimony of Marian Hicks, Administrative Assistant, St. Joseph's Hospital, and Barbara Myres-Fernandez.
Received into evidence were St. Joseph's exhibits as follows: (1) The application for Certificate of Need; (2) Settlement Agreement between the Department and St. Joseph's; (3) Jan Parkinson's resume; (4) List of physicians with offices within the satellite hospital area; (5) Patient Origin Trends; (6) Letter from Barbara Myres-Fernandez to Bob Maryanski, dated September 12, 1985;
Letter from Barbara Myres-Fernandez to Liz Dudek, dated September 17, 1985;
Letter from Jim McElreath to Barbara Myres-Fernandez, dated November 14, 1985; (9) Response to omissions, with attachments (Composite); (1) Letter from Jim McElreath to Barbara Myres-Fernandez, dated December 30, 1985; (11) Letter from Marta Hardy to Barbara Myres-Fernandez, dated February 2, 1986, with attached State Agency Action Report; (12) Letter from Barbara Myres-Fernandez to Reid Jaffe, dated January 30, 1986, with attachments; (13) Letter from Jan Parkinson to Ivan Wood, dated February 9, 1987, with attachments; (14) Carolyn Vallone's resume; (15) Enrique Marcet's resume; (16) Architect's drawing; (17) Barbara Myres-Fernandez' resume; and (18) Patient files.
The Department presented the following witnesses: Ed Meadows, Medical Facilities Architect, accepted as an expert in health care architecture; and Bob Sharpe, Director of Comprehensive Planning, accepted as an expert in health care planning.
Received into evidence were the Department's exhibits as follows: (1) Ed Meadows' review of schematics and Part G of the Certificate of Need application;
(2) "Architectural Reports, St. Joseph's Hospital North, Hillsborough County, Florida, Certificate of Need No. 4288, Partial Approval Request"; (3) Bob Sharpe's resume; (4) Report prepared by the Hospital Cost Containment Board on hospital data for the year 1985; (5) Two-page excerpt from the 1985 financial data report of the Hospital Cost Containment Board, prepared by Reid Jaffe; (6) State Health Plan, Volume 2; and (7) 1985 District VI Health Plan.
University Community Hospital (University) presented the following witnesses: Roger Polcyn, Assistant Administrator; Barry Silvers, Executive Director of the Pasco-Pinellas West Central Florida Health Council, accepted as an expert in health care planning; Ward Koutnik, accepted as an expert in traffic engineering; Michael Carroll, Vice President of TriBrook Group, accepted as an expert in health care planning; Norm Stein, Assistant Administrator of Fiscal Services, accepted as an expert in hospital finance and financial management; and Elton Scott, accepted as an expert in health care economics.
Received into evidence were University's exhibits as follows: (2) Overlap with primary and secondary service areas indicated by St. Joseph's in the Certificate of Need application; (3) Ward Koutnik's Travel Time Study, Figure 1;
Ward Koutnik's Travel Time Study, Figure 2; and (5) "Analysis of St. Joseph's Hospital's Proposed Satellite Facility."
Tampa General presented the following witnesses: Ernest Peters, accepted as an expert in traffic engineering; Tom Rutherford, Chief Executive Officer of Carrollwood Community Hospital; Newell France, Managing Director of the Hillsborough County Hospital Authority and President of Tampa General Hospital, accepted as an expert in hospital administration; Charles Butler, Chief Marketing Officer and Vice President of Marketing and Public Affairs, accepted as an expert in marketing and health care services; and Paul Powers, Chief Financial Officer, accepted as an expert in hospital financial matters.
Received into evidence were Tampa General's exhibits as follows: (1) Photograph of current building construction on the grounds of St. Joseph's Hospital located on Buffalo Avenue; (10) Photograph of construction of the Medical Arts Building; (14) Copy of 1986 District VI Hospital Utilization Report, acute care beds as of March 16, 1987; (15) Ernest Peters' resume; (16) Peters and Associates Time Travel Study; (17) Carrollwood Community Hospital, Patient Origin Study; (18) Newell France's resume; (19) Findings and Recommendations, Report of the Tampa General Hospital Task Force, Greater Tampa Chamber of Commerce, Tampa, Florida, April 3, 1984; (20) Hillsborough County Hospital Authority Annual Financial and Statistical Report, Fiscal Year End, September 30, 1986; (21) Hillsborough County Hospital Authority, Five-Year Projection of Revenue and Expenses; (22) Charles Butler's resume; (23) Paul Powers' resume; (24) Market Share Analysis, Hospital Cost Containment Board, 1985; (25) Hillsborough County Hospital Authority, Tampa General Hospital Discharges and Gross Charges by Financial Class, dated March 9, 1987; (26) Obstetrical and Nursery Discharges by Financial Class, dated March 9, 1987; (27) Discharges and Gross Charges by Financial Class, Net of Obstetrics and Nursery, dated March 9, 1987; (28) "Tampa General Hospital Inpatients Residing within St. Joseph's Hospital Northwest Service Area, Net of Obstetrics and Nursery Services"; and (29) Pro Forma Statement of Income and Effect on Tampa General Hospital if St. Joseph's Hospital's CON 4288 is Approved, and if Tampa General Hospital's Market Share is Lost, dated March 25, 1987.
Town and Country presented the following witnesses: Rick Knapp, accepted as an expert in health care finance; and Mark Richardson, accepted as an expert in health care planning.
Received into evidence was Humana's exhibit as follows: (1) Ernst and Whinney audit report for St. Joseph Hospital as of January 30, 1986, and 1985.
Dr. Robert Polackwich testified as a public witness. The final volume of the transcript was filed on July 8, 1987, and the parties were thereafter allowed thirty days to file proposed findings of fact, conclusions of law and memoranda. Specific rulings on timely filed proposed findings of fact are included in the Appendix to this Recommended Order.
FINDINGS OF FACT
The Parties
St. Joseph's is a tertiary care hospital located at 3001 West Buffalo Avenue, Tampa, Hillsborough County, Florida. There is spatial capacity for 703 beds at St. Joseph's, but only 649 beds are licensed, staffed and in use. It is sponsored by the Franciscan Sisters of Allegheny, and is a subsidiary of a holding company, St. Joseph's Health Care Center, Inc.
Without CON approval, St. Joseph's cannot increase licensed bed capacity at its current facility on West Buffalo Avenue, or open the satellite facility which is here at issue.
St. Joseph's current service area includes Hillsborough County, particularly the central and northern portions of the County.
Occupancy rates for St. Joseph's in medical surgical areas have been approximately 80 percent, and at peak times have exceeded 90 percent. However during the last half of 1986, the occupancy rate fell to 74 percent.
St. Joseph's provided 16.8 percent of all Medicaid care in Hillsborough County during 1982-83 and 17 percent during 1983-84. It is second to Tampa General in provision of health care to indigents in Hillsborough County. With the exception of Tampa General, St. Joseph's has the largest Medicaid patient admissions of all Hillsborough County hospitals. In 1986, the bad debt/charity care/Medicaid contractual discount for St. Joseph's was approximately $11.3 million. However, while 6.9 percent of all patient days county wide are Medicaid patient days, St. Joseph's has only 5 percent Medicaid patient days.
The cost of indigent care is absorbed and offset by paying patients. St. Joseph's decision to seek approval for a satellite in the Carrollwood area is a wise business decision since there is a high percentage of paying patients residing in that area of Hillsborough County.
St. Joseph's has a 23 percent market share of all patient days reported in Hillsborough County, the largest market share for all hospital medical- surgical services provided in the County, and also has the largest market share in the proposed service are of the satellite. Its market share of paying patients is much higher than for Medicaid or indigent patients. However, since 1984 St. Joseph's market share has been declining while Tampa General's has been increasing.
A relatively high proportion of admissions at St. Joseph's current facility, over 40 percent, are obtained through its emergency room. The proposed satellite will have an emergency room, but it will not offer the same intensity of services as at the current facility on West Buffalo Avenue.
The Department is the state agency with the authority and responsibility to consider CON applications.
Intervenor Humana of Florida, d/b/a Tampa Women's Hospital (Humana) owns and operates a 192 bed women's hospital in Tampa, Florida, which includes
96 obstetrical beds. Its occupancy rate in 1986 was approximately 50 percent.
Intervenor University Community Hospital (University) is an existing hospital with 404 licensed and 320 operating beds located on East Fletcher Avenue, Tampa, Florida, and offers a full range of acute care hospital services. University is located within the service area of the proposed satellite and has been experiencing a decline in patient days from 109,000 in 1983 to 84,000 in 1986. It has had to reduce its number of employees in the last three years by
15 percent-20 percent. University has a 57 percent occupancy rate.
Intervenor Tampa General Hospital (Tampa General) operates a publically supported hospital in Tampa, Florida, providing a full range of acute care services, including obstetrical/gynecological services with 707 licensed and 619 operating beds. Tampa General has CON approval for 1000 beds if it completes planned renovations. It has an occupancy rate of 80 percent-82 percent and is treating 70 percent of all Medicaid patients in Hillsborough County. Tampa General has provided $70 million of indigent care, including $40 million in charity, annually. Carrollwood is within its service and marketing area.
Intervenor AMI Town and Country Medical Center (Town and Country) is a
201 bed general acute care hospital located at 6001 Webb Road, Tampa, Florida. Its occupancy rate in 1986 was approximately 46 percent.
There is no dispute among the parties regarding the standing of Intervenors in this proceeding.
The occupancy rates at University, Town and Country and Humana are substantially below optimal levels, and substantial unused capacity exists at each of these hospitals.
St. Joseph's proposed satellite will not offer any services that are not currently available to residents of the proposed service area, and will duplicate services at University, Town and Country, and Carrollwood Community Hospital, as well as services provided at St. Joseph's existing facility.
The Application and Project
On or about October 15, 1985 St. Joseph's filed with the Department an application for CON 4288. This application sought approval for a 150 bed general acute care satellite hospital in Carrollwood, Hillsborough County, Florida, and proposed the transfer of 150 existing licensed beds from St. Joseph's facility on West Buffalo Avenue, Tampa, to the satellite. The estimated total cost of this project was $16,775,000. Specifically, St. Joseph's proposed the transfer of 96 medical/surgical beds, including ICU, CCU and progressive care beds, 15 obstetrical beds and 39 pediatric beds, including PICU.
The Department provided St. Joseph's with an omissions letter on or about November 14, 1985, to which St. Joseph's responded on or about December 30, 1985.
By letter dated February 28, 1986, the Department preliminarily denied St. Joseph's application for CON 4288 stating, "The project is not justified by the 1985 District VI Health Plan or the 1985-87 Florida State Health Plan."
The Department's decision to deny this application was published in Volume 12, Number 11, Florida Administrative Weekly, on March 14, 1986, and St. Joseph's filed its petition for formal administrative hearing on April 4, 1986.
On or about February 18, 1987 St. Joseph's and the Department executed a Stipulation and Settlement Agreement which, in pertinent part, provides:
DHRS finds and agrees that there is a need for St. Joseph's to relocate and transfer 100 acute-care beds (but not any licensed obstetrical beds) and acute-care services (but not any obstetrical services) from its existing acute-care hospital and construct a
100 bed acute-care satellite hospital in Hillsborough County in light of a balance review of all relevant criteria established by Section 381.494 Florida
Statutes, including the levels of indigent and Medicaid care agreed to herein. The project will occur entirely within Hillsborough County and not result in
any increase in licensed beds for St. Joseph's. DHRS agrees that a partial approval of the St. Joseph's CON Application will satisfy this need and that said application should be partially approved as hereinbelow further
specified ...
The agreements and commitments made by DHRS in paragraph 1 above are predicated on commitments made by St. Joseph's concerning its intention to provide certain percentages of Medicaid and indigent care in its proposed satellite hospital and to seek only partial approval of its application
as specified herein... St. Joseph's commitments, which are relied upon by DHRS and which shall be set forth as conditions in said CON, are as follows:
Not less than 3.5 percent of the total number of admissions at St. Joseph's satellite hospital shall be rendered to
Medicaid patients. Not less than 3.0 percent of said total admissions shall be rendered to
non-Medicaid "charity/uncompensated" patients whose family income as applicable for the twelve months prior to determination
of eligibility is equal to or less than
150 percent of the then current Federal Poverty Guidelines. St. Joseph's shall obtain and retain sufficient information to verify this eligibility determination. The 3.0 percent "charity/uncompensated" patients shall be acknowledged as such at admission, shall not include patients receiving third party
payments and shall be in addition to St. Joseph's "bad debt" patients... DHRS specifically recognizes the lengthy history and mission of St. Joseph's in providing extensive indigent care services in Hillsborough County.
St. Joseph's agrees to undertake a diligent and good faith effort to encourage physicians on its medical staff to admit and treat Medicaid and charity/uncompensated care patients in such numbers as to comply with the minimum percentages established
in paragraph (a)above ...
(e) St. Joseph's agrees that it will request at hearing and henceforth seek only partial approval of its proposed CON Application, as follows:
The satellite facility shall be reduced in scope from 150 licensed beds to 100 licensed beds.
The number of licensed beds to be relocated from the existing St. Joseph's Hospital shall be reduced in scope from
150 licensed beds to 100 licensed beds.
None of the licensed beds to be relocated to the satellite hospital shall include licensed obstetrical beds, nor shall the obstetrical services, if any, provided at St. Joseph's existing hospital be relocated to the satellite facility.
Labor, delivery and nursery facilities shall be deleted from the satellite hospital.
DHRS has consistently maintained the proposed square footage and project cost is inadequate for a 150 bed hospital and more appropriate for a 100 bed hospital. Therefore, the total square
footage and total project cost shall remain unchanged...
The Stipulation and Settlement Agreement referred to in Finding of Fact 21 was executed following, and in consideration of, additional information prepared and submitted by St. Joseph's to the Department on or about January 30, 1987 and February 9, 1987.
At hearing, St. Joseph's and the Department sought partial approval of CON 4288 to conform to the terms of the Stipulation and Settlement Agreement. Intervenors opposed such partial approval.
The partial approval sought by St. Joseph's and the Department represents an identifiable portion of St. Joseph's original CON application. Originally, St. Joseph's sought approval to transfer 150 acute care beds, including obstetrical, but at hearing St. Joseph's sought approval for a transfer of only 100 acute care beds, without obstetrical. Labor, delivery and nursery facilities have been deleted from the satellite proposal, but total square footage, physical designs and total cost of the project remain the same for the partial approval sought at hearing compared with the original application. The number of operating rooms has also remained the same. The proposed location in Carrollwood, Hillsborough County, remains unchanged.
The project at issue in this case is a 100 bed acute care satellite hospital with, 96,500 total gross square footage (965 gross square feet per bed). The schematic plan submitted by St. Joseph's provides for the following beds and includes, but is not limited to, the following facilities: (72 private rooms, 2 Semi-private); pediatric beds (5 private, 5 semi-private), ICU/CCU (9 beds); space for radiology/nuclear medicine, emergency and outpatient services, laboratory, physical therapy, pharmacy, EEG/EKG, inhalation therapy, surgical suite, sterilization suite, cafeteria, laundry, storage, maintenance, chapel, nurses office, and other miscellaneous facilities. Total project costs are estimated at $16,775,000, the same as for the original 150 bed transfer proposal.
The land upon which the satellite will be located was purchased for $3 million in cash.
The satellite will be able to operate at a higher occupancy level than St. Joseph's existing hospital due to the larger proportion of single bed rooms and less severe cases being treated at the satellite.
After review of St. Joseph's original application for the transfer of
150 acute care beds in March 1986, the Department concluded that the proposed gross square footage per bed of 643 was below the standard range of 800-1000 gross square feet per bed, and also that the total project cost estimate of
$111,833 per bed was way below the average standard range of $175,000 to
$200,000 per bed. After review of the identifiable portion of St. Joseph's application for which approval was sought at hearing, the Department concluded that the total gross square footage of the satellite, square footage per bed, construction estimates, and the total project cost estimates were reasonable and acceptable. The gross square footage was raised from 643 to 965, and the cost per bed was increased from $111,833 to $167,750.
The Service Area
The area which St. Joseph's proposes to serve with its satellite hospital is the Carrollwood area of northwest Hillsborough County which is located in the Department's District VI. This is the fastest growing area in Hillsborough County, with an average age which is lower than the rest of the County, and an average income level above the County average. Specifically, almost 35 percent of the population in the satellite's proposed primary service area was between 25 and 44 years old in 1980, compared with approximately 28 percent for the County. In the category of 65 years and older, the primary service area had 8.2 percent of its population, while the County had 11.4 percent. A higher percentage of paying patients reside within the proposed
service area than for Hillsborough County as a whole. Nevertheless, 6 percent 7 percent of the service area population have incomes below the federal poverty level, compared with 16 percent for the County as a whole. The area is already served by Medicaid providers.
St. Joseph's medical roster indicates over 140 of its physicians have offices in the satellite's proposed service area. However, approximately 100 of these physicians are also on the staffs of Intervenors.
The site for the satellite was chosen after review of patient origin data and population growth projections for Hillsborough County.
St. Joseph's is currently treating at its facility on West Buffalo avenue an average of 64 patients a day who reside within the proposed service area of the satellite and who are not cardiac, cancer or psychiatric patients. St. Joseph's has an average daily census of 519 patients and proposes to serve
64 of these patients, who reside within the satellite's primary service area, at the satellite.
Stipulations
The parties have stipulated that St. Joseph's is able to provide quality care at the proposed satellite, and also that St. Joseph's is not proposing or relying upon probable economies and improvements in service that may be derived from the operation of joint, cooperative, or shared health care resources, except to the extent that the project includes a satellite facility. Intervenors contend that health services will be most economically provided by not constructing the satellite facility. Finally, the parties stipulate that Section 381.494(6)(c)11., Florida Statutes, relating to the provision of a substantial portion of services or resources to individuals not residing in the service district in which the entities are located, or adjacent thereto, is not applicable in this case.
Non-Rule Policy for Bed Transfers
The Department currently has no rule governing the transfer of acute care beds. Rule 10-5.011(1)(m), previously Rule 10-5.11(23), does not apply to acute care transfers since it addresses new or additional beds.
However, the Department has begun developing a departmental policy for review of acute care transfer applications which do not request additional beds, and is seeking industry and staff input for the concepts expressed in a draft policy. In its current conceptual form, the transfer policy follows the statutory review criteria as they might apply to transfer applications which do not request new beds.
The emerging policy, urges review of acute care transfer applications with emphasis upon the following health care planning criteria: reduction of excess beds, better utilization of existing beds, the encouragement of hospital efficiency, improvement of financial and geographic access, the encouragement of quality care, and the encouragement of competition in the hospital industry.
St. Joseph's partial approval request was reviewed for conformity with this emerging policy by Robert Sharpe, the Department's Director of Comprehensive Health Planning (the state's chief health planner), who is charged with development of the bed transfer policy.
Bed reduction is a key element for consideration in the Department's emerging policy. However, St. Joseph's 79-80 percent occupancy is greater than the Department's 75 percent hospital occupancy threshold contained in the acute care rule (Rule 10-5.011(1)(m)). Application of a bed reduction formula is not reasonable, according to Sharpe, for a facility which is using its beds to a much greater extent than other facilities in the County.
The Department's emerging policy would evaluate whether a proposed transfer of beds to a new site would encourage a better use of the beds than at the existing site.
The emerging policy contemplates transfers of acute care beds within a single county or subdistrict in an effort to be responsive to the needs of communities. This concept is consistent with the District VI Local Health Plan's stated desire that planning occur on less than a county basis.
The Department's emerging policy evaluates the relative efficiency of the hospital proposing a bed transfer.
In evaluating the relative charges made by similar Florida hospitals, the Hospital Cost Containment Board has devised hospital groupings for evaluation purposes. Of the 23 hospitals that are characterized as "group nine" hospitals in Florida, St. Joseph's ranks 16th of those 23 and is below the 50th percentile in gross revenues per adjusted admission. This means that St. Joseph's has lower charges per adjusted admission than most of the other comparable hospitals in Florida.
Despite the fact that St. Joseph's is a large tertiary facility, Hospital Cost Containment Board data establishes that St. Joseph's is an efficient hospital facility.
Another aspect of the Department's emerging policy is that of improving Medicaid and indigent access for patients. Excluding Tampa General, St. Joseph's has more Medicaid patient admissions than all other hospitals in Hillsborough County. During the past four years, St. Joseph's has consistently provided approximately 17 percent of the Medicaid care to hospital patients in Hillsborough County. The Department considers St. Joseph's to be an indigent care facility in Hillsborough County.
The Department also considers geographic access when reviewing transfers. The State Health Plan has an objective that 90 percent of the population in an urban area be within 30 minutes drive time to an acute care facility by 1989. The Local Health Plan has concluded that all of Hillsborough County is currently within a 30 minute drive time.
The quality of care provided by a facility proposing a transfer is also considered, and the parties have stipulated that St. Joseph's will provide quality health care services.
The Department examines the competitive affects of approval of a transfer of acute care beds. In this case, the charge levels, costs per admission, and current inventory of beds at Hillsborough County acute care hospitals were examined. Since St. Joseph's charges and costs are low relative to other hospitals, and since there is an excess of beds in the County, the Department assumed that there would be competition for existing patients, and further concluded that approval of the satellite facility would promote price and non-price competition among hospitals in Hillsborough County.
Considering each of the outlined elements of the Department's emerging policy, the state's chief health planner testified that the emerging policy supports the requested approval of an identifiable portion of the St. Joseph's satellite application.
Need And Consistency With State and Local Plans
Health planning for CON purposes involves the assessment of need on a community-wide, rather, than an institution specific, basis. Planning on less than a county-wide basis is inappropriate in Hillsborough County.
In 1986 there was an excess capacity of 1400 acute care beds in Hillsborough County. District VI is overbedded by nearly 700 beds. The Local Health Council projects that in 1992 there will still be a surplus of nearly 800 beds in the County. Since this application proposes the transfer of beds, it neither increases or decreases this excess capacity. The State Health Plan as well as the Department's non-rule policy recommends eliminating excess bed capacity, but this proposal is not consistent with that recommendation.
Existing acute care hospitals in Hillsborough County experienced only
percent occupancy in 1986, a drop from 71 percent in 1984. Patient days have declined at an average of 2.6 percent per year since 1983 while the population in Hillsborough County actually increased 11.2 percent during this time.
In spite of a significant reduction in hospital utilization and average lengths of stay in the area, the number of licensed hospital beds in Hillsborough County increased from 3,028 in 1981 to 3,457 in 1986, an increase of 14.2 percent or 429 beds.
The State Health Plan contains a stated goal of 80 percent occupancy by 1989. The Local Health Plan recognizes 80 percent for medical-surgical and ICU/CCU occupancy for all beds in the County and 90 percent occupancy for each institution. Only Tampa General and St. Joseph's are currently achieving these occupancy level goals. In fact, occupancy rates for the five hospitals within, or adjacent to, the proposed satellite's service area range from 40 percent to
percent.
Based upon review and consideration of the expert testimony and evidence presented at hearing, it is found that an acceptable hospital optimum occupancy rate would be from 75 percent to 85 percent overall, and 90 percent for medical-surgical beds.
Of the 649 beds currently at St. Joseph's, on average there are 149 unoccupied beds on any given day.
St. Joseph's proposal does not address the key element of the State Health Plan and the Department's non-rule policy which calls for bed reduction when transfers are considered. This failure is particularly significant in view of the substantial overbedding which currently exists in Hillsborough County and which is projected to exist through 1992. To the contrary, the proposal actually would result in a net increase of 3 coronary care unit beds and 3 pediatric intensive care unit beds.
The most important stated purpose of the acute care policies in the 1985 District VI Health Plan is "optimizing utilization of existing resources", and this purpose is implemented through a policy that provides, "Suture changes
in the hospital facilities and services systems should occur so as to maintain the fiscal and programmatic integrity of all institutions providing a full range of services... " This proposal is inconsistent with this aspect of the Local Health Plan since it does not reduce the number of excess beds, while at the same time it would transfer 100 beds to a predominantly affluent, young and growing area of the County from which St. Joseph's would realize a substantial number of paying, as opposed to indigent or Medicaid, patients. This could reasonably be expected to increase St. Joseph's already very strong patient payor mix, and increase occupancy rates above 80 percent while other facilities are at or below 50 percent. At the same time, this proposal could actually weaken St. Joseph's financial position since its margin of revenue over expenses was 12.5 percent in 1985 and 10 percent in 1986, and the pro forma for the satellite, although overly optimistic as discussed below, shows only a 4.8 percent margin in the second year of operation.
Underutilization of existing facilities is not consistent with sound health care planning because it ultimately results in higher costs to patients. Other facilities currently serving the proposed service area will be more likely to achieve optimum occupancy levels if the satellite is not built, than if it is.
Another important purpose of the Local Health Plan is "promoting access for the indigent and underserved population to adequate health care," a purpose also stated in the Department's non-rule policy. The service area of the proposed satellite has a median family income of $30,132 which is 26 percent higher than for Hillsborough County as a whole. Locating a hospital in a predominantly affluent area, does not generally increase access for indigents. In fact, by the terms of its Settlement Agreement, St. Joseph's will actually decrease its commitment to Medicaid patients from the current 5 percent to the proposed 3 percent at the satellite.
The percentage of charity care to gross revenues at St. Joseph's in 1986 was .6 percent, and was budgeted at .5 percent for 1987. This is not a significant charity commitment in relation to gross revenues, and the satellite proposal will not improve this commitment.
The State Health Plan states as an objective achieving a ratio of less than 4.11 beds per thousand by 1989. This proposal does not promote this objective because it does not represent any net reduction in total number of beds.
This proposal is also inconsistent with the State Health Plan which recommends a minimum pediatric size of 20 beds since it will have only 18.
Need In Relation to Geographic Accessibility
According to the 1985 District VI Health Plan, "The geographic distribution of hospital services in Hillsborough County is such that the entire population is within the 30 minute drive time standard of adequate resources." Ernest J. Peters, who was accepted as an expert in traffic engineering, testified that the entire proposed satellite service area is within 30 minutes of at least one existing hospital. The 30 minute drive time standard is set forth as Objective 2.2 in the 1985-87 State Health Plan.
Residents of the proposed service area have geographic accessibility to hospital services within a 30 minute drive time. St. Joseph's does not dispute this fact, but rather Barbara Myres-Fernandez, who was not accepted as
an expert in traffic studies, testified that at peak travel times the 30 minute standard was exceeded. However, according to Robert Sharpe, the Department's Director of Comprehensive Health Planning, who was accepted as an expert in health care planning, as well as Ward Koutnik and Ernest J. Peters, who were accepted as experts in traffic engineering, all of the proposed service area is within 30 minutes of existing hospital facilities. Peters testified that if the satellite is built, travel times to the nearest hospital would only be improved by 2.77 minutes for Carrollwood residents in 1990. The weighted average travel time, according to Peters, for the entire proposed service area to the nearest acute care hospital is 13.13 minutes, which will only increase to 13.96 minutes in 1990.
The evidence therefore establishes that there would be an insubstantial geographic access gain to Hillsborough County residents if the satellite is approved, and in any event need based upon a lack of geographic accessibility has not been established.
Need In Relation to Financial Accessibility
According to Myres-Fernandez, it is St. Joseph's contention on the issue of accessibility that approval of the satellite will improve financial accessibility to hospital services for indigent and Medicaid patients. In order to maintain its commitment to indigent, Medicare and charity care, St. Joseph's argues it must continue to attract and maintain its market share of private pay patients, and the Carrollwood area provides a growing source of such patients.
However, according to St. Joseph's, 64 of the patients to be treated at the satellite are already being treated at West Buffalo Avenue. These 64 do not include cardiac, cancer or psychiatric patients. Therefore, only 16 "new" patients would be served at the satellite if it were to achieve the goal of 80 percent occupancy. Even with St. Joseph's predicted 90 percent occupancy rate, only 26 "new" patients would be served.
No evidence was offered to establish that a higher level of indigents should be expected at the satellite hospital than at St. Joseph's existing facility, particularly since in its Agreement with the Department, St. Joseph's has committed to serve a lower percentage of indigents than is presently true at the main facility on West Buffalo.
St. Joseph's current payor mix is very favorable, and no reasons have been shown why it should deteriorate in the foreseeable future. In fact, the mix may actually be improving, according to Hospital Cost Containment Board data.
Indigent access to health care is not improved by locating a satellite hospital in a predominantly affluent area in which only 6-7 percent of the population is below the poverty level, as compared to 16 percent for the County as a whole. This proposal represents a wise business decision by St. Joseph's because it is an attempt to increase its number of private pay patients. However, it will not improve indigent access.
Financial accessibility is a criteria to be evaluated under Section 381.494(6),(c), Florida Statutes, and the Department's non-rule policy. This proposal does not improve access for indigents and therefore is not consistent with this statutory and policy criterion.
Availability and Adequacy of Alternatives
There are five existing hospitals within, or adjacent to, the proposed service area with substantial unused capacity, including University and Carrollwood Community Hospital which is a 120 bed facility offering general acute care, emergency room and outpatient services. Carrollwood Community Hospital has an occupancy rate of approximately 50 percent, and thus has excess capacity. While one-third of its patients are osteopathic, two-thirds are allopathic; only one-fifth of its physician staff is comprised of osteopaths. The proposed service area of the satellite is within the current service areas of Intervenors. Thus, adequate alternative facilities are available to residents in the Carrollwood area.
Since there are existing alternative acute care facilities within thirty minutes of the proposed service area, an ambulatory surgical center might be an appropriate alternative to the satellite proposal. However, St. Joseph's did not explore such an alternative, and presented no evidence to establish the basis for its assertion that this would not be appropriate. Such a facility could maintain and even enhance referral patterns to the main facility on West Buffalo.
Additionally, it has not been shown that splitting St. Joseph's 649 beds between two locations will be more efficient than leaving all 649 beds on West Buffalo, and thereby saving the $16,775,000 in capital expense to construct the satellite.
Therefore, alternatives to the construction of a satellite facility do exist, and St. Joseph's has not shown that such alternatives are less feasible or less efficient than the satellite proposal at issue.
Needs For Special Equipment and Services
It has not been established that any need exists within the proposed service area for special equipment and services which this proposal would provide, and which are not reasonably and economically accessible in adjoining areas.
Need For Research and Educational Facilities
It has not been shown that any need exists in the proposed service area for research and educational facilities which this application would address.
Availability of Manpower
During the hearing, the parties stipulated to the adequacy of the staffing patterns proposed by St. Joseph's for the 100 bed satellite, and also their ability to recruit and fill those staffing needs.
Approval of this satellite would not have an adverse impact on Intervenors' ability to attract or retain qualified staff since the staff for the satellite would be primarily transferred from the West Buffalo Avenue facility along with the transfer of 100 beds. Since 64 patients who reside in the satellite's service area are currently being treated at the West Buffalo Avenue site, staff who serve these patients will be transferred to the satellite when it opens.
Additionally, St. Joseph's conducts an extensive recruitment program outside, as well as within, the Hillsborough County area. It is therefore unlikely that staff for the satellite will come in any significant number from any of the Intervenors.
It is recognized that there is almost a 20 percent vacancy level for registered nurses in District VI, and a 33 percent vacancy level for critical care nurses. However, St. Joseph's turn-over rate is relatively low, and therefore it is reasonable to expect that the satellite would be staffed predominantly with staff already employed at the West Buffalo location.
Availability of Funds
St. Joseph's revenues exceeded expenses by $10-$12 million for fiscal year ending June 30, 1986, and it is among the five most profitable hospitals in the State. It has no long term debt, and is the only facility of its size in Florida which has no debt. Financially, St. Joseph's is in an extremely sound position.
St. Joseph's has the ability to financially support the satellite facility and to internally finance its construction. Third-party financing is also being considered. However, its operating margin will decrease slightly as a result of the construction of the satellite. Historically, it has realized an operating margin exceeding 10 percent, although it projects a profit margin of slightly under 5 percent for fiscal year 1987.
Financial Feasibility
St. Joseph's proposed satellite's total gross revenue for the first two years of operation was determined by multiplying the current average bed rate at the facility on West Buffalo by the expected occupancy. Proposed deductions from revenue were also based upon St. Joseph's historical experience.
Assumptions utilized to prepare the satellite's pro forma relied upon St. Joseph's historical information, including but not limited to revenues, fixed expenses and variable expenses.
St. Joseph's used a patient admission rate of 125 per 1,000, and a proposed average length of stay of 6 days compared with a current average length of stay at the main facility of 7-7.2 days.
A basic assumption used by St. Joseph's was that on the first day of operation, 64 patients currently being treated at the main facility who reside in the Carrollwood area, will be transferred to the satellite for treatment, and thereafter an average of 64 of the satellite's beds will be occupied each day by Carrollwood residents who would have sought treatment at the West Buffalo location in the absence of the satellite.
St. Joseph's assumed a case mix intensity level of 1.36 for the satellite, compared with 1.46-1.48 at the West Buffalo location. A decrease in the case mix index results in a corresponding decrease in revenues and expenses. Complex hospitalizations receive a high case mix index, and simple procedures receive a low case mix index.
St. Joseph's did not conclusively establish that 64 patients presently at the main facility, except for cardiac, cancer and psychiatric patients, who reside in the service area of the satellite could be transferred
on the first day of operation, or that this daily census could be maintained. Physician and patient preferences determine where a patient is admitted.
Severity of illness or age of the patient are also factors. Admissions through the emergency room, which account for nearly 50 percent of the admissions on West Buffalo, cannot be redirected. It has not been shown that physicians or patients would prefer admission to a satellite, or that the very severe cases or aged patients, as well as emergency room admissions, could be redirected away from the main facility. While the satellite will have an emergency room, the satellite will not be equipped to handle the complexity of cases presently admitted on West Buffalo.
Additionally, transferring 64 patients by ambulance on the first day of operation from West Buffalo to the satellite, in the middle of treatment, has not been shown to be reasonable or feasible, or that physicians and patients would tolerate such a procedure. The opening of a satellite usually begins incrementally and gradually while staff becomes familiar with the new facility and equipment. St. Joseph's has not shown that it is feasible to open the satellite with an immediate occupancy of 64 percent on day one, and 82 percent in the first year of operation. Historically, occupancy levels at satellites run between 20 percent-40 percent the first year.
Forecasted revenues are unrealistic because St. Joseph's basic assumption about the transfer of 64 Carrollwood residents is unreasonable and unsubstantiated.
St. Joseph's has also failed to correctly and fully estimate salary expenses at the satellite because salary estimates do not account for shift and weekend differentials paid to nurses. More than 50 percent of nurses at St. Joseph's receive shift differential pay, which is a 15 percent increase above their base hourly rate.
Given the age of the service area population, a more accurate use rate for the satellite would be between 90 and 95 admissions per 1,000 population, rather than the 125 per 1,000 used by St. Joseph's. The lower use-rate reduces the available pool of patients in the service area from 136 estimated by St. Joseph's to 109.
94 Assumptions based on historical data from the main facility are inappropriate for developing the satellite's pro forma because the satellite will treat less complex cases than the main facility, and the age and income levels in the satellite's service area are significantly different from the County as a whole. Rather than a case mix index of 1.36, an average satellite and community hospital case mix index is 1.00. Using a corrected case mix index of 1.00 rather than 1.36, results in a projected loss for the satellite rather than a profit in its second year of operation.
Because construction and operation of the satellite will reduce St. Joseph's overall operating margin below 5 percent-6 percent, which is a minimum standard, St. Joseph's will be less able to provide charity, indigent and Medicaid care after construction of the satellite than it is currently.
Impact On Health Care Costs
St. Joseph's proposal to spend approximately $16 million on construction of the satellite to serve from 16 to 26 "new" patients could reasonably be expected to adversely affect health care costs. This is exacerbated by the shelled-in space at both the satellite and the existing
facility. The size of the satellite was not reduced when beds were reduced from
150 to 100, and the St. Joseph's architect testified there is enough square footage to add back the 50 beds.
Despite St. Joseph's assertions that it will not increase rates to subsidize the satellite as a business investment in its own future, it appears reasonable to expect that rates would have to be increased if St. Joseph's is to maintain its historical profit margin, and to offset its failure to properly project salaries, use rates and the case mix index at the satellite. The satellite will continue to lose money through its second year of operation, and this would have to be recouped through increased charges, or reduced profit margins, which could then be expected to result in a reduced ability to fund charity, indigent and Medicaid patients.
Project Costs
Construction cost estimates are reasonable. The estimated cost for fixed equipment for a 150 bed satellite facility was reduced by $250,000 to reflect the decrease cost of moving 50 beds and the obstetrical surgical suite. This $250,000 savings provides an inflationary contingency in case of construction delays, and while it does increase construction costs from
$9,650,000 to 9,900,000, it does not have a negative impact on the appropriateness of the proposed construction costs.
Equipment cost estimates as well as total project cost estimates, with the exception of salary estimates, are reasonable.
Admitting Practices
St. Joseph's has a written admissions policy which requires that it receive patients regardless of their ability to pay. There is no evidence that St. Joseph has ever denied admission to any patient in a life threatening situation.
It is standard practice at St. Joseph's to request a deposit on admission and to inform patients that arrangements for payment can be made upon discharge. However, inability to pay the deposit or to make financial arrangements does not result in a patient being denied admission.
Patients who are unable to pay are sometimes admitted at St. Joseph's through, the emergency room when a physician sends such patients to the emergency room.
Effect On Competition
Enhancement of future competition is a factor which is considered under the Department's non-rule transfer policy
There is substantial competition among acute care hospitals in Hillsborough County which are currently engaged in aggressive marketing campaigns.
Dominance by one provider in a market can be anti-competitive, and at the present time St. Joseph's is the dominant provider for paying patients in Hillsborough County. The current market shares for hospitals already serving the satellite's proposed service area are: St. Joseph's - 33.45 percent;
University - 28.92 percent; Town and Country - 17.72 percent; Tampa General -
11.06 percent; and Carrollwood Community - 8.86 percent.
The satellite will allow St. Joseph's market share to increase and possibly approach 40 percent. Such market dominance is not consistent with a competitive market.
St. Joseph's increase in market share will take patients away from the other hospitals now serving the Carrollwood area, particularly University which receives almost 38 percent of all its patients from this area. University is already projecting an operating loss for fiscal year 1987 of $563,000.
Tampa General is a disproportionate provider of indigent services in the County. The Local Health Plan has as one of its objectives protecting such providers of indigent care. Tampa General lost $12 million in fiscal 1983, and in order to improve its financial condition embarked on a $160 million renovation and building effort. It is now indebted to bondholders in that amount. Tampa General's payor mix has begun to improve, and it is actively marketing in the proposed service area. Approval of this project will not further the Local Health Plan objective of protecting disproportionate indigent providers, because it will result in the loss to Tampa General of a significant number of paying patients.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this case. Section 120.57(1), Florida Statutes.
The project here at issue is an identifiable portion of St. Joseph's original application, and as such it is proper to consider whether this project should be approved based upon the evidence presented at hearing. Section 381.494(8)(c), Florida Statutes; See Findings of Fact 21, 24 and 25. Prior to hearing, St. Joseph's and the Department announced their intention to seek and support, respectively, an identifiable portion of the original application. See, Humosco, Inc., d/b/a Humana South Broward, et al. v. Department of Health and Rehabilitative Services, DOAH Case No. 83-3944 et al., Order dated June 24,
1986; Health Care and Retirement Corporation of America, d/b/a Heartland of Palm Beach v. Department of Health and Rehabilitative Services, Final Order entered September 24, 1986.
Intervenors have argued that under the circumstances of this case, remand is required by NME Hospital, Inc. v. Department of Health and Rehabilitative Services, 492 So.2d 379 (Fla. 1st DCA 1986) and Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 483 So.2d 700 (Fla. 1st DCA 1985). However, unlike the situation underlying those cases, there is no need methodology set forth by rule which is applicable to the intra- district transfer of acute care beds which is here at issue. Central Florida Regional Hospital v. Daytona Beach General Hospital, 475 So.2d 974 (Fla. 1st DCA 1985). Therefore, there is no fixed pool of beds or planning horizon, identified by agency rule, to which this application is directed. Thus, the "corrections" which were advocated by St. Joseph's at final hearing do not change the fixed pool or planning horizon to which its application is directed since these considerations are not present in this case. For this reason, NME and Gulf Court are not applicable, and do not support remand of this case.
The applicant bears the ultimate burden of demonstrating its entitlement to a CON. Florida Department of Transportation v. J.W.C. Co.,
Inc., 396 So.2d 778 (Fla. 1st DCA 1981). Since this is a de novo proceeding, it is the position of the parties at the time of hearing that is relevant in determining whether the applicant has met its burden. Therefore, the Department's change of position is not improper, and evidence offered by the Department in support of this application is relevant and has been considered.
McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977); Boca Raton Artificial Kidney Center v. Department of Health and Rehabilitative Services, 475 So.2d 260 (Fla. 1st DCA 1985).
In determining if there is a need for the proposed facility, a balanced consideration of all statutory and rule criteria must be made. Department of Health and Rehabilitative Services v. Johnson & Johnson, 447 So.2d
361 (Fla. 1st DCA 1984); Humana, Inc. v. Department of Health and Rehabilitative Services, 469 So.2d 889 (Fla. 1st DCA 1985). The weight given to each individual criteria is not fixed, but varies depending on the facts of each case. North Ridge General Hospital, Inc., v. NME
Hospitals, 478 So.2d 1138 (Fla. 1st DCA 1985); Collier Medical Center, Inc. v. Department of Health and Rehabilitative Services, 462 So.2d 83 (Fla. 1st DCA 1985).
The Department has adopted Rule 10-5.011(1)(m), Florida Administrative Code, (formerly Rule 10-5.11(23)) setting forth the methodology for determining need for acute care beds. However, as noted above, this rule does not apply to the intradistrict transfer of acute care beds, such as is here at issue. Central Florida Regional Hospital v. Daytona Beach General Hospital,
475 So.2d 974 (Fla. 1st DCA 1985). The fact that no rule exists setting forth a need methodology in bed transfer cases must therefore be addressed in order to determine what criteria must be applied in performing the required balanced consideration, and also whether such consideration can be given at all, absent a rule. While the existence of non-rule policy has been recognized, it must be clearly explicated by the agency or party seeking to rely thereon. McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977); Florida Medical Center v. Department of Health and Rehabilitative Services, 463 So.2d
380 (Fla. 1st DCA 1985). This is a heavy burden, and the non-rule policy does not have the presumption of validity which is afforded formally promulgated agency rules. Barker v. Board of Medical Examiners, 428 So.2d 720 (Fla. 1st DCA 1983). The non-existence of a need methodology rule is not fatal to an application for a CON if incipient, non-rule policy can be sufficiently explicated at hearing. In this case, unlike that in Upjohn Healthcare Services, Inc., v. Department of Health and Rehabilitative Services, 496 So.2d 147 (Fla. 1st DCA 1986), St. Joseph's and the Department did offer evidence and expert testimony at hearing to elucidate the non-rule policy applicable here.
We now turn to the statutory criteria found at Section 381.494(6)(c), Florida Statutes, and the Department's non-rule policy, to determine whether St. Joseph's, supported by the Department, has established its entitlement to the CON it seeks. Upon review, it is concluded that St. Joseph's has not met its burden of proof, and is therefore not entitled to approval of the identifiable portion of CON 4288 which is here at issue. Although St. Joseph's has established that sufficient manpower is available to staff the satellite, that it has the financial ability to support the satellite and to internally finance construction, that its financial position is extremely sound, that quality of care and adequacy of proposed staffing patterns are not at issue, that project cost estimates, with the exception of salary estimates, are reasonable, and that it has an admitting policy which does not allow a patient to be denied admission based upon the inability to pay, the applicant has not sustained its burden to
show consistency with State and Local Health Plans as well as the Department's non-rule policy, need based upon geographic or financial accessibility considerations, optimization of existing resources, increased access for indigents and the underserved, lack of available alternatives to serve the Carrollwood area, and financial feasibility of the project. It has also not been shown that the project would not have an adverse impact on health care costs and competition among existing providers. On balance, therefore, the criteria which St. Joseph's has failed to meet outweigh, and are more significant to sound health planning than the criteria that have been met.
Specifically, St. Joseph's application fails to satisfy Section 381.494(6)(c)1. and the Department's policy which require analysis of need for the project in relation to the Local and State Health Plans. The application does not satisfy the plans because it fails to promote community-wide, rather than institution specific, health planning, and is inconsistent with the goal contained within those plans of insuring efficient utilization of existing resources and containing the cost of health care. The project also would not implement the goals of reducing excess bed capacity or of promoting access for indigents and the underserved to health care. Further, it is inconsistent with the recommended minimum pediatric size.
Section 381.494(6)(c)2. and Departmental policy require assessing the project against the availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services. Section 381.494(6)(c)4. requires examination of existing alternatives to the satellite. St. Joseph's failed to establish that it satisfied these criteria. The population of the satellite proposed service area is amply served by existing facilities that have more than enough capacity to provide services to be offered at the satellite. It is inconsistent with these review criteria to permit a project which would exacerbate an already existing problem of hospital under-utilization in Hillsborough County, and which would unnecessarily hinder the ability of existing hospitals to eventually reach optimum occupancy levels and, therefore, become more efficient. It was not established that need exists based upon either geographic or financial accessibility.
An assessment of economies and improvements in service derived from operation of joint, cooperative, or shared health care resources is required by Section 381.494(6)(c)5. Given the increased costs, and erosion of St. Joseph's financial posture which would be caused by the satellite, this criteria is not satisfied. Section 381.494(6)(c)7. requires assessment of the project against the need for research and educational facilities. The applicant presented no evidence relevant to this criteria and, therefore, this criteria has not been satisfied.
Section 381.494(6)(c)8. can be broken down into several distinct subparts. First, it requires assessment of the availability of resources, including manpower and funds, to start up and operate. The St. Joseph's application satisfies this component. However, the flawed pro formas do not adequately demonstrate sufficient revenues to cover reasonably anticipated operating expenditures, and do not establish the profitability of the satellite, even after two years of operation. Second, it requires assessments of project impact upon clinical needs of health professional training programs in the district. No evidence was presented relevant to this criteria, and, therefore, this criteria has not been satisfied. Third, this section also requires analysis of the extent to which the proposed services will be accessible to schools for the training of medical personnel, and St. Joseph's did not provide
any evidence relevant to this criteria. An examination of alternatives to the project establishes that it would represent a needless consumption of financial and manpower resources, and will lessen St. Joseph's ability to provide charity, indigent and Medicaid care due to reduced operating margins. Finally, this section encourages accessibility of the proposed services to all residents of the service district. The proposal satisfies this criteria because the satellite would be no less accessible, in terms of geographic, financial, and service considerations, than any other hospital within the District. However, it must be noted that the applicant has not established either the geographic or financial need for this project given the existing facilities available to serve residents of this area.
Section 381.494(6)(c)9. requires that the applicant demonstrate immediate and long-term financial feasibility of the proposal. The satellite proposal fails to meet this criteria, both from the standpoint of looking only at the satellite and from examining the impact upon the St. Joseph's system as a whole. It has not been established that the satellite would be profitable due to incorrect assumptions in the pro formas, and it does appear that, to the contrary, it would harm St. Joseph's financial situation and make it less able to serve indigents and charity cases. Section 381.494(6)(c)10. requires examining the project in relation to needs and circumstances of health maintenance organization. St. Joseph's did not present any evidence relevant to this criteria, and, therefore, it has not been satisfied.
An examination of the impact of the project on the cost of providing the services to be proposed by the applicant, and corresponding consideration of "the effects of competition on the supply of health services being proposed and the improvements or innovations in the financing and delivery of health services which foster competition and service to promote quality assurance and cost- effectiveness" is required by Section 381.494(6)(c)12. and the Department's policy. Because the satellite can reasonably be expected to increase the cost of health services to be provided by St. Joseph's, because it will have an adverse impact upon competition, and because the project is not cost effective, this criteria has not been satisfied. Section 381.494(6)(c)13. requires examination of the costs and methods of establishing the physical plant and equipment. The applicant did satisfy this criterion because it adequately accounted for all such project costs. The applicant did not, however, adequately or fully address projected salary expenses.
In conducting a balanced consideration of relevant criteria used to evaluate this application, the recent case of Dade County v. American Hospital of Miami, Inc., Case No. 66,689, Op. Jan. 6, 1987 (Fla. 1987), makes it clear that the state has an extremely strong interest in ensuring that indigents have access to health care. In American Hospital of Miami, the issue before the Court was whether a county hospital must provide post-emergency medical care to indigents. The Court answered the question in the negative and commented on the "perplexing problem" of "providing health care to our indigent citizens " Id. at
7. The Court noted the recent economic changes in the health care industry because of the appearance of many private-for-profit hospitals, which has "complicated the problem of indigent health care." Id. at 7. The Department's non-rule policy commitment to enhancing economic access directly addresses the Court's concerns, but St. Joseph's failure to establish that its application promotes access for indigents or the underserved is a significant factor in concluding, after a balanced consideration of all criteria that this application should not be approved. The applicant has not shown that this application is consistent with this extremely important policy commitment.
124. Finally, Intervenors have cited several recent instances involving cases in which a transfer of beds was proposed and the Department, after review and hearing, concluded that the transfer could not be approved. Halifax Hospital Medical Center v. Department of Health and Rehabilitative Services, 8 FALR 2038, March 19, 1986; Palm Beach-Martin County Medical Center v. Department of Health and Rehabilitative Services, 7 FALR 5615, November 4, 1985. Additionally, the recent Recommended Orders of denial in Humana Hospital South Broward v. Department of Health and Rehabilitative Services, DOAH Case Nos. 84- 0235, 85-3940, Recommended Order entered August 4, 1987, and Harborside Hospital
Department of Health and Rehabilitative Services, DOAH Case No. 84-4368 et seq., Recommended Order entered January 26, 1987, have been correctly cited by Intervenors in support of denial. The facts in these cases are sufficiently similar to the facts herein to require reference to, and consideration of these prior decisions. The consistent application and interpretation of review criteria to be applied in evaluating bed transfer applications, is essential to insuring that the CON process is carried out in an orderly and fundamentally fair manner.
Based upon the foregoing, it is recommended that the Department enter a Final Order denying St. Joseph's application for CON 4288 for the establishment of a satellite hospital with the transfer of 100 acute care beds.
DONE AND ENTERED this 8th day of September, 1987, in Tallahassee, Florida.
DONALD D. CONN
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 8th day of September, 1987.
APPENDIX TO RECOMMENDED ORDER
Rulings on St. Joseph's Proposed Findings of Fact are as follows:
Adopted in Finding of Fact 1.
Rejected as unnecessary and cumulative.
Adopted in Finding of Fact 1.
Adopted in Findings of Fact 1, 2.
Rejected as unnecessary and irrelevant.
Adopted in Finding of Fact 2.
Adopted in Finding of Fact 1.
Adopted in Finding of Fact 8.
Adopted in Finding of Fact86.
Rejected as irrelevant.
Adopted in Findings of Fact 3, 7.
Adopted in Findings of Fact 4, 38.
Adopted in Finding of Fact 4.
Adopted in Findings of Fact 38, 54.
Adopted in Findings of Fact 38, 6, 70, 54.
Adopted in Finding of Fact 5.
Adopted in Finding of Fact 5.
Adopted in Finding of Fact 5.
Rejected as irrelevant and not supported by competent substantial evidence.
Adopted in Finding of Fact 5.
Adopted in Findings of Fact 5, 44.
Adopted in Finding of Fact 6.
Rejected as irrelevant and unnecessary.
Rejected as irrelevant and unnecessary.
Rejected as unnecessary.
Rejected as unnecessary.
Adopted in Findings of Fact 6, 38, 70.
Adopted in Finding of Fact 7.
Rejected as irrelevant and unnecessary.
30-34. Rejected as irrelevant and unnecessary.
Adopted in Finding of Fact 10.
Adopted in Finding of Fact 11.
Adopted in Finding of Fact 12.
Rejected as irrelevant.
Adopted in Finding of Fact 108.
Adopted in Finding of Fact 12.
41-43. Rejected as irrelevant and unnecessary.
Rejected as cumulative and unnecessary.
Rejected as speculative, irrelevent and unnecessary.
Adopted in Finding of Fact 12.
Adopted in Findings of Fact 21, 23, 50.
Adopted in Finding of Fact 21.
Rejected in Findings of Fact 59, 68.
Rejected in Findings of Fact 65, 71, 97, 106.
Rejected as not based on competent substantial evidence.
Adopted in Findings of Fact 18, 21, 22.
Adopted in Finding of Fact 24.
Adopted in Finding of Fact 24.
Rejected as unnecessary and cumulative.
Adopted in Findings of Fact 32, 67, but rejected in 89, 90.
Adopted in Findings of Fact 32, 67.
Adopted in Finding of Fact 21.
Adopted in Finding of Fact 26.
Rejected as not based competent substantial evidence, and irrelevant.
Adopted in Finding of Fact 29.
62-63. Rejected as cumulative and unnecessary. 64-65. Adopted in Finding of Fact 29.
Rejected in Findings of Fact 11, 72.
Rejected in Findings of Fact 65, 72.
Adopted in Finding of Fact 30.
Adopted in Finding of Fact 31. 70-71. Adopted in Finding of Fact 7.
Rejected as unnecessary and not based competent substantial evidence.
Adopted in Findings of Fact 6, 70.
Rejected as irrelevant and speculative. 75-76. Adopted in Finding of Fact 7.
77-78. Adopted in Finding of Fact 6.
Rejected in Findings of Fact 59, 60, 68, 70, 95.
Adopted in Findings of Fact 6, 70.
Rejected as irrelevant.
Adopted in Finding of Fact 30.
83-91. Rejected in Findings of Fact 7, 105 and otherwise rejected as cumulative and unnecessary.
Adopted in Finding of Fact 34.
Adopted in Finding of Fact 35.
Adopted in Finding of Fact 36.
Adopted in Finding of Fact 37.
Adopted in Finding of Fact 38.
Adopted in part in Finding of Fact 39.
Rejected as cumulative.
Adopted in Finding of Fact 40.
Adopted in Finding of Fact 41.
Adopted in Finding of Fact 42.
Adopted in Finding of Fact 43.
Adopted in Finding of Fact 44 104-105. Rejected as cumulative.
Adopted and rejected in part in Finding of Fact 45.
Adopted in Finding of Fact 46.
Adopted in Finding of Fact 47.
Rejected in Findings of Fact 47, 106, 107, 108.
Adopted in Finding of Fact 48.
111-122. Rejected in Findings of Fact 63, 64, 65, and otherwise irrelevant and cumulative.
Rejected in Findings of Fact 68, 70, 71.
Adopted in Findings of Fact 29, 70.
Adopted in Finding of Fact 78.
Adopted in Finding of Fact 78.
Rejected as unnecessary.
Adopted in Finding of Fact 80.
Rejected as cumulative.
Adopted in Finding of Fact 81.
131-133. Rejected as cumulative and unnecessary.
134. Adopted in Findings of Fact 78, 83, 98, 99.
135-138. Rejected in Findings of Fact 50, 56, 57, 59, 61, 62, 65, 71,
108.
Rejected as unnecessary.
Adopted in part in Finding of Fact 59, but otherwise rejected as
unnecessary and not based competent substantial evidence.
141-146. Rejected as unnecessary and irrelevant.
147. Rejected as not based on competent substantial evidence.
148. Rejected in Findings of Fact 50, 56, 57, 59, 61, 62, 65, 71, 108.
Rejected in Finding of Fact 75.
Rejected in Finding of Fact 73.
Rejected in Findings of Fact 72-75.
152-153. Adopted in part in Findings of Fact 89, 90 but otherwise rejected as unnecessary.
154-155. Rejected as irrelevant and unnecessary.
Adopted and rejected in part in Finding of Fact 72.
Rejected as irrelevant.
Adopted in Finding of Fact 42.
Adopted in Finding of Fact 107.
Rejected as unnecessary and speculative.
Rejected in Findings of Fact 87, 89.
Rejected as not based on competent substantial evidence.
Rejected as irrelevant and not based on competent substantial evidence.
Rejected as irrelevant and unnecessary.
Rejected as not based on competent substantial evidence. 166-169. Rejected as irrelevant.
170-171. Rejected in Finding of Fact 106.
172. Rejected as unnecessary.
173-174. Rejected as not based on competent substantial evidence and irrelevant.
175. Rejected as unnecessary.
176-177. Adopted in Finding of Fact 82.
Rejected as unnecessary.
Adopted in Finding of Fact 82.
Adopted in Finding of Fact 83.
Rejected as unnecessary.
Rejected in Findings of Fact 91-94.
Adopted and rejected in part in Finding of Fact 83.
Rejected in Findings of Fact 84-95.
185-189. Adopted in part in Finding of Fact 85 but otherwise rejected as unnecessary.
Rejected in Finding of Fact 97.
Adopted in Finding of Fact 85.
Rejected as unnecessary.
Rejected as unnecessary.
194-195. Rejected in Finding of Fact 92. 196-197. Rejected as unnecessary.
198. Adopted in Finding of Fact 85.
199-200. Rejected as unnecessary and irrelevant.
Adopted in Finding of Fact 86 and rejected in Finding of Fact 93.
Adopted in Finding of Fact 86.
Adopted in Finding of Fact 87.
Rejected as not based on competent substantial evidence.
Rejected in Findings of Fact 89, 90, 91.
Adopted in Finding of Fact,.88.
Adopted in Finding of Fact 88, but rejected in Finding of Fact 94.
Adopted in Finding of Fact 88.
Rejected as unnecessary and cumulative.
Adopted in Finding of Fact 89.
Adopted in Finding of Fact 42.
Adopted in Finding of fact 43.
213-217. Rejected as unnecessary and irrelevant.
218. Adopted in part in Finding of Fact 97, but otherwise rejected as irrelevant.
219-220. Rejected as unnecessary.
Rejected as cumulative.
Rejected as irrelevant and unnecessary.
Adopted in Finding of Fact 98. 224-233. Missing.
Adopted in Finding of Fact 98.
Adopted in part in Finding of Fact 24, but otherwise rejected as cumulative and unnecessary.
236-241. Adopted in Finding of Fact 28.
Adopted in Finding of Fact 96.
Adopted in Finding of Fact 24.
Rejected as irrelevant and unnecessary. 245-246. Adopted in Finding of Fact 100.
247. Adopted in Finding of Fact 102.
248-250. Adopted in Findings of Fact 100, 101.
251. Adopted in Findings of Fact 100-102. 252-253. Adopted in Finding of Fact 101
Adopted in Finding of Fact 102.
Adopted in Findings of Fact 100-102. 256-259. Rejected as cumulative.
260. Rejected as irrelevant.
Rulings on Department of Health and Rehabilitative Services Proposed Findings of Fact:
Adopted in Finding of Fact 34.
Adopted in Finding of Fact 35.
Adopted in Finding of Fact 36.
Adopted in Finding of Fact 37.
Adopted in Finding of Fact 38.
Adopted in Finding of Fact 39.
Rejected as cumulative.
Adopted in Finding of Fact 40.
Adopted in Finding of Fact 41.
Adopted in Finding of Fact 42.
Adopted in Finding of Fact 43.
Adopted in Finding of Fact 44.
Rejected as cumulative.
Rejected as cumulative.
Adopted in Finding of Fact 45.
Adopted in Finding of Fact 46.
Adopted in Finding of Fact 47.
Adopted in Finding of Fact 47.
Adopted in Finding of Fact 48.
Rulings on University Community Hospital's Proposed Findings of Fact:
Adopted in Finding of Fact 1.
Adopted in Finding of Fact 17.
Adopted in Findings of Fact 19, 20.
Adopted in part in Finding of Fact 21.
Adopted in Finding of Fact 49.
Rejected as unnecessary and cumulative.
Adopted in Findings of Fact 19, 20.
Adopted in Findings of Fact 37, 48.
Adopted in Findings of Fact 50, 56.
Adopted in Findings of Fact 51, 52, 57.
Adopted in Finding of Fact 59.
Adopted in Finding of Fact 61. 13-14. Rejected as unnecessary.
15. Adopted in Finding of Fact 58, but otherwise rejected as irrelevant and unnecessary.
16-17. Adopted; in Findings of Fact 63-65.
18. Rejected as irrelevant
19-21. Adopted in Findings of Fact 68-71.
Adopted in part in Finding of Fact 29.
Adopted in Finding of Fact 16.
Adopted in Findings of Fact 72, 76, 77, 104.
Adopted in Findings of Fact 56, 81.
Adopted in Findings of Fact 80, 81 and otherwise rejected as not based on competent substantial evidence.
27-35. Adopted in Findings of Fact 85-94 but otherwise rejected, as cumulative and unnecessary.
36-38. Adopted in Findings of Fact 85, 94.
39-40. Adopted in Findings of Fact 88, 94.
Adopted in Finding of Fact 94.
Adopted in Finding of Fact 92.
Adopted in Finding of Fact 73.
44-49. Adopted in Findings of Fact 96, 97 but otherwise rejected as cumulative, irrelevant and not based on competent substantial evidence.
Adopted in Finding of Fact 6.
Rejected as cumulative and unnecessary.
Rejected as irrelevant.
Adopted in Finding of Fact 105.
Adopted in Finding of Fact 69.
Adopted in Finding of Fact 69, but otherwise rejected as unnecessary and cumulative.
Adopted in Findings of Fact 68, 95, 97.
Adopted in Finding of Fact 60.
Adopted in Finding of Fact 35.
Adopted in Findings of Fact 38, 50.
Adopted in Finding of Fact 55, but otherwise rejected as irrelevant and unnecessary.
Rejected as cumulative.
Adopted in Finding of Fact 53.
63-65. Rejected as cumulative and unnecessary.
Adopted in Finding of Fact 104.
Adopted in Finding of Fact 105.
Adopted in Findings of Fact 82, 83.
Adopted in Finding of Fact 105.
70-71. Rejected as unnecessary and cumulative.
72. Adopted in part in Finding of Fact 106, but otherwise rejected as cumulative and unnecessary.
73-76. Adopted in part in Findings of Fact 96, 97, but otherwise rejected as cumulative and unnecessary.
Adopted in part in Finding of Fact 95, but otherwise rejected as unnecessary.
Adopted in part in Findings of Fact 91, 97, but otherwise rejected as unnecessary.
Rejected as cumulative.
Adopted in Findings of Fact 1,1, 107.
Adopted in Finding of Fact 30.
82-84. Adopted-in Finding of Fact 107, but otherwise rejected as cumulative.
Rulings on Tampa General's Proposed Findings of Fact:
Adopted in Finding of Fact 17.
Adopted in Finding of Fact 18.
Adopted in Finding of Fact 19.
Adopted in Finding of Fact 22.
Adopted in Finding of Fact 21.
Rejected as unnecessary.
Adopted in part in Finding of Fact 33, but otherwise rejected as unnecessary.
8-9. Adopted in part in Finding of Fact 1, but otherwise rejected as unnecessary.
Adopted in Findings of Fact 1, 3.
Adopted in Finding of Fact 4. 12-13. Rejected as irrelevant.
Adopted in part in Findings of Fact 82, 83, but otherwise rejected as unnecessary.
Adopted in Findings of Fact 7, 29, 57, 69, 105.
Adopted in Finding of Fact 5.
Adopted in Finding of Fact 11.
Adopted in Finding of Fact 13.
Adopted in Finding of Fact 12.
Adopted in Findings of Fact 10, 72.
Adopted in Findings of Fact 10, 11, 12, 13, 15, 72.
Adopted in Findings of Fact 49, 50.
Adopted in part in Findings of Fact 10, 11, 12, 13, 15, 50, 51, 52, 53, 54 and 72, but otherwise rejected as cumulative.
Adopted in Finding of Fact 29. 25-26. Rejected as irrelevant.
27. Adopted in Finding of Fact 16.
28-35. Adopted in part in Findings of Fact 17, 21, 24, 25, 28, but otherwise rejected as unnecessary.
Adopted in Findings of Fact 83, 97.
Adopted in Findings of Fact 34, 35.
Rejected as cumulative and unnecessary.
39-44. Adopted in Findings of Fact 63-65, but otherwise rejected as cumulative and unnecessary.
45-51. Adopted in Findings of Fact 66-71, but otherwise rejected as cumulative and unnecessary.
52-55. Adopted in Findings of Fact 36, 38, 50, 56, but otherwise rejected as unnecessary and cumulative.
Adopted in Findings of Fact 12, 104.
Adopted in Findings of Fact 14, 16, 72, 106.
Adopted in Finding of Fact 106.
Adopted in Findings of Fact 105, 106, 107.
Adopted in Finding of Fact 108.
Rejected as cumulative and unnecessary.
Adopted in Finding of Fact 74.
Rejected as irrelevant and unnecessary.
64-65. Adopted in part in Finding of Fact 74, but otherwise rejected as irrelevant.
Adopted in Finding of Fact 16
Adopted in Finding of Fact 73.
68-69. Rejected as unnecessary and without specific citations to the record.
70-73. Adopted in Findings of Fact 91, 94, 95, 97, but otherwise rejected as cumulative and unnecessary.
Adopted in part in Findings of Fact 81, 97.
Adopted in part in Finding of Fact 57, but otherwise rejected as cumulative.
Adopted in Finding of Fact 107.
77-83. Adopted in Finding of Fact 108, but otherwise rejected as cumulative and irrelevant.
Rulings on Town and Country's Proposed Findings of Fact: 1-3. Introductory matters.
Adopted in Finding of Fact 1.
Adopted in Finding of Fact 17.
Adopted in Findings of Fact 19, 20.
Adopted in Finding of Fact 21.
Adopted in Findings of Fact 24, 25.
Adopted in Finding of Fact 56.
Rejected as cumulative and unnecessary.
Rejected as unnecessary.
12-16. Adopted in Findings of Fact 87, 89, 90.
17. Adopted in Finding of Fact 8.
18-24. Rejected as unnecessary and cumulative.
25-26. Adopted in Finding of Fact 67, but otherwise rejected as unnecessary.
27. Rejected as without citation to the record and cumulative.
28-37. Adopted in Findings of Fact 86, 93, but otherwise rejected as unnecessary and cumulative.
38-39. Adopted in Findings of Fact 106-108.
Rejected as without citation to record and unnecessary.
Adopted in Findings of Fact 15, 50, 51. 42-44. Adopted in Finding of Fact 51.
Adopted in Finding of Fact 52. Adopted in Findings of Fact 4, 12, 38.
Adopted in Findings of Fact 11, 13, 72.
48. Rejected as without citation to the record and unnecessary
49-51. Rejected as unnecessary and not based on competent substantial evidence
Adopted in Finding of Fact 50.
Rejected as without citation to the record and unnecessary. 54-55. Adopted in Finding of Fact 53.
56. Adopted in Finding of Fact 54.
57-58. Adopted in Finding of Fact 58.
Rejected as cumulative.
Adopted in Finding of Fact 60.
Rejected as unnecessary.
Adopted in Findings of Fact 5, 60.
63-64. Rejected as cumulative and unnecessary.
Adopted in Findings of Fact 29, 70.
Adopted in Finding of Fact 29.
Adopted in Findings of Fact 71, 95.
68-70. Adopted in Findings of Fact 45, 63-65.
Rejected as irrelevant and unnecessary.
Adopted in Findings of Fact 103-108. 73-74. Adopted in Finding of Fact 16.
75-77. Adopted in Findings of Fact 82, 83.
Rejected as unnecessary.
Adopted in Finding of Fact 82.
Rejected as cumulative.
Rejected as irrelevant.
Adopted in Finding of Fact 105.
Adopted in Finding of Fact 82.
Rejected in Finding of Fact 99.
85-92. Rejected in Finding of Fact 98, and otherwise rejected as not based on competent substantial evidence.
93-96. Rejected in Finding of Fact 99, and otherwise rejected as not based on competent substantial evidence.
Adopted in Finding of Fact 97.
Rejected as unnecessary.
99-103. Rejected as cumulative and unnecessary.
104-105. Adopted in Findings of Fact 95, 97, but otherwise rejected as unnecessary and cumulative.
Adopted in Finding of Fact 95.
Rejected as cumulative.
Adopted in Finding of Fact 95.
Adopted in Finding of Fact 97.
Adopted in Findings of Fact 95, 97.
111-114. Rejected as cumulative and unnecessary.
115-116. Adopted in Finding of Fact 97, but otherwise rejected as cumulative and unnecessary.
117. Rejected as without citations to the record. 118-119. Adopted in Finding of Fact 88.
120-122. Adopted in Finding of Fact 94.
123. Rejected as cumulative and without citations to the record. 124-128. Adopted in Finding of Fact 92, but otherwise rejected as
cumulative and unnecessary.
129-130. Rejected as not based on competent substantial evidence. 131-133. Rejected as cumulative and unnecessary.
134. Adopted in Finding of Fact 14.
Rulings on Humana's Proposed Findings of Fact:
1-2. Adopted in Finding of Fact 1.
Adopted in Finding of Fact 17.
Adopted in Finding of Fact 19.
Adopted in Finding of Fact 21.
Adopted in Finding of Fact 24.
Adopted in Finding of Fact 25.
8-10. Adopted in Finding of Fact 16. 11-12. Adopted in Finding of Fact 3. 13-14. Rejected as cumulative.
15-17. Adopted in Finding of Fact 50.
Adopted in Findings of Fact 53, 54.
Adopted in Finding of Fact 51.
20-21. Adopted in Finding of Fact 52.
Adopted in Finding of Fact 51.
Adopted in Finding of Fact 55.
24-41. Adopted in Findings of Fact 45, 63-65, but otherwise rejected as unnecessary and cumulative.
42-46. Adopted in Finding of Fact 29.
Adopted in Finding of Fact 21.
Rejected as unnecessary.
Adopted in part in Finding of Fact 59. 50-51. Adopted in Finding of Fact 60.
52. Rejected as unnecessary.
53-55. Adopted in Findings of Fact 85-95, but otherwise rejected as unnecessary.
56-57. Adopted in Finding of Fact 90.
58-66. Adopted in Findings of Fact 86, 93, but otherwise rejected as unnecessary.
67-71. Adopted in Findings of Fact 87, 89, 90, 91.
Adopted in Finding of Fact 88.
Rejected in Finding of Fact 88.
Rejected as cumulative.
75-77. Adopted in Finding of Fact 94, but otherwise rejected as unnecessary.
78-81. Adopted in Finding of Fact 92. 82-85. Rejected as unnecessary.
86-92. Adopted in part in Finding of Fact 97, but otherwise rejected as cumulative and unnecessary.
93-94. Adopted in Finding of Fact 82, but otherwise rejected as unnecessary.
95. Adopted and Rejected in part in Findings of Fact 4, 12. 96-97. Adopted in Findings of Fact 105, 106, 107.
Rejected as cumulative.
Adopted in Finding of Fact 61.
100-101. Adopted in Findings of Fact 63-65.
102. Adopted in Finding of Fact 50. 103-104. Rejected as cumulative.
105-107. Adopted in Findings of Fact 57, 107, 108. 108-109. Adopted in Finding of Fact 60.
110-114. Adopted in Findings of Fact 82, 83, but otherwise rejected as cumulative and unnecessary.
Adopted in Finding of Fact 108.
Rejected as unnecessary.
Rejected as cumulative.
118-119. Adopted in Finding of Fact 62.
120-121. Adopted in Findings of Fact 72-75.
122. Adopted in Findings of Fact 50, 56.
123-125. Rejected in Finding of Fact 28 and as not based competent substantial evidence.
COPIES FURNISHED:
Ivan Wood, Esquire
WOOD, LUCKSINGER & EPSTEIN
The Park in Houston Center 1221 Lamar Street, Suite 1400
Houston, Texas 77010
Howard J. Hochman, Esquire Southeast Financial Center
200 S. Biscayne Blvd, Suite 3700 Miami, Florida 33131
James C. Hauser, Esquire Post Office Box 1876 Tallahassee, Florida 32302
John Radey, Esquire
101 North Monroe Street, Suite 1000 Tallahassee, Florida 32302
Cynthia Tunnicliff, Esquire Post Office Box 190 Tallahassee, Florida 32302
Douglas L. Mannheimer, Esquire Post Office Drawer 11300 Tallahassee, Florida 32302
Theodore E. Mack, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32399-0700
Michael J. Cherniga, Esquire Post Office Drawer 1838 Tallahassee, Florida 32302
Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32399-0700
Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32399-0700
John Miller, Esquire Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32399-0700
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
ST. JOSEPH'S HOSPITAL,
Petitioner,
vs. CASE NO. 86-1542
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,
Respondent,
and
HUMANA OF FLORIDA, d/b/a TAMPA WOMEN'S HOSPITAL, UNIVERSITY COMMUNITY HOSPITAL, TAMPA GENERAL HOSPITAL and AMI TOWN AND COUNTY 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.
RULING ON EXCEPTIONS FILED BY
ST. JOSEPH'S HOSPITAL (ST. JOSEPH'S)
St. Joseph's excepts, in part, to the Hearing Officer's finding of fact number 1 regarding St. Joseph's spatial capacity. The Hearing Officer's findings of fact are entitled to the same weight as the verdict of a jury. Gruman vs. State, 379 So2d 1313 (2nd DCA 1980). It is the Hearing Officer's function to resolve conflicts in the evidence, judge the credibility of witnesses, draw permissible inferences from the evidence, and make findings of fact; and the agency may not reject a finding unless there is no competent, substantial evidence from which the finding could reasonably be inferred. Heifetz vs. Department of Business Regulation, 475 So2d 1277 at 1281 (Fla. 1st DCA 1985). Exception number 1 is denied as the findings to which St. Joseph's objects are supported by competent, substantial evidence.
St. Joseph's excepts to the Hearing Officer's finding of fact number 16, which states that "St. Joseph's proposed satellite will not offer any services that are not currently available to residents of the proposed service area." Exception number 2 is denied in that St. Joseph argues the weight of the evidence. The Hearing Officer's finding is supported by competent, substantial evidence.
St. Joseph's excepts, in part, to the Hearing Officer's finding of fact number 12, which states that Tampa General Hospital treats 70 percent of all Medicaid patients in Hillsborough County. St. Joseph's, in its exception, states that this percentage includes both Tampa General Hospital and the Hillsborough County Hospital Authority. St. Joseph's fails to allege how this distinction can have any impact on the result of this proceeding. Further, the Hearing Officer's finding is supported by competent, substantial evidence. Exception number 3 is denied.
St. Joseph's excepts, in part, to the Hearing Officer's finding of fact number 29. Exception number 4 is denied in that St. Joseph argues the weight of the evidence. The Hearing Officer's finding is supported by competent, substantial evidence.
St. Joseph's excepts, in part, to the Hearing Officer's finding of fact number 39. The Hearing Officer substantially accepted St. Joseph's proposed finding regarding HRS' emerging policy. Exception number 5 is denied in that the Recommended Order applies the HRS policy on transfer of beds. See findings of fact numbers 36 and 39. St. Joseph's efficiency would not be enhanced by construction of the satellite. See findings of fact numbers 84 through 97.
St. Joseph's excepts to the Hearing Officer's finding of fact number 45 regarding geographic access. Exception number 6 is denied in that St. Joseph argues the weight of the evidence. The Hearing Officer's finding is supported by competent, substantial evidence. Geographic access is an appropriate consideration.
St. Joseph's excepts to the Hearing Officer's finding of fact number
The Hearing Officer's conclusion that planning on a less than county-wide basis is inappropriate for Hillsborough County is rejected as a conclusion of law. Intra- district or intra-sub district transfers require planning decisions on whether beds are more needed in one part of a district or sub district than another. In finding of fact number 40 the Hearing Officer acknowledged the District VI Local Health Plan's conclusion that health planning should be done on less than a county wide basis.
St. Joseph's excepts to finding of fact number 50 on the grounds that the Hearing Officer implies that a transfer proposal should be denied if it does not propose to reduce excess bed capacity in the district or sub district. It is fundamental that a decision on a transfer proposal must be made on the basis of a weighing of all statutory, rule, and policy criteria. In Collier Medical Center vs. State 462 So2d 83 at 84 (Fla. 1st DCA 1985) the Court held that the "... weight to be given to each individual criterion is not fixed, but rather must vary on a case-by-case basis, depending on the facts of each case."
Clearly it would be unlawful to reject a transfer proposal of a highly utilized and otherwise efficient hospital solely on the grounds that the hospital does not propose to delicense beds. Findings of fact numbers 4, 11, 13, 15, 51 and
53 show that St. Joseph's is using its beds to a much greater extent that other facilities in the county. St. Joseph's exception number 8 is granted to the extent that the Hearing Officer expressed conclusions of law inconsistent with the law stated here.
St. Joseph's excepts to the Hearing Officer's finding of fact number 56 on essentially the same grounds as it stated in exception number 8. Again St. Joseph's exception number 9 is granted to the extent the Hearing Officer expressed conclusions of law inconsistent with the law stated in the ruling on exception number 8.
St. Joseph's excepts to finding of fact number 57 on the grounds that the Hearing Officer has committed an error of law by disregarding the important policy criteria of protecting the long term viability of hospitals which are significant providers of services to Medicaid patients and other indigent patients. Again St. Joseph's exception number 10 is granted to the extent that the Hearing Officer's conclusions conflict with the principle that all criteria must be weighted on a case by case basis.
St. Joseph's excepts to the Hearing Officer's finding of fact number 58, which speaks to the underutilization of existing facilities in Hillsborough County. Exception number 11 is denied in that the legislature has designated HRS as the "State Health Planning Agency." Section 381.493(3)(t). Excessive capital investment in hospitals often results in increased charges to the consumer and an important goal of CON regulation is cost containment. Morton F. Plant vs. State, 491 So2d 586 (Fla. 1st DCA 1986), Biomedical Applications vs. HRS, 370 So2d 19 at 25 (Fla. 2nd DCA 1979).
St. Joseph's excepts to finding of fact number 59 on the grounds that the Hearing Officer failed to "... recognize the concept of cross subsidization, which allows increased accessibility to Medicaid and indigent patients." As stated in the ruling on exception number 10 an important policy criteria in considering a transfer proposal is whether the transfer facilitates the along term financial viability of a significant Medicaid provider. Subsidizing Medicaid services by locating a satellite facility in an affluent area is the "cross subsidization" referred to by St. Joseph's. St. Joseph's exception number 12 is granted to the extent that the Hearing Officer's conclusions
conflict with the principle that all criteria must be weighed on a case by case basis. It is noted that the terms of the St. Joseph's settlement agreement provide for minimum, not a maximum, commitment to Medicaid patients. See finding of fact number 21.
St. Joseph's excepts to the Hearing Officer's finding of fact number
Exception number 13 is denied. See findings of fact number 100, 101, and 102.
14. St. Joseph's excepts to the Hearing Officer's finding of fact number
Exception number 14 is denied in that St. Joseph argues the weight of the evidence. The Hearing Officer's finding is supported by competent, substantial evidence.
St. Joseph's excepts to the Hearing Officer's finding of fact numbers
63 through 65. Exception number 15 is denied in that St. Joseph argues the weight of the evidence. The Hearing Officer's findings are supported by competent, substantial evidence. Reduction of beds is a factor to be weighed in evaluating a proposal to transfer beds.
St. Joseph's excepts to the Hearing Officer's finding of fact number
70 through 71. Exception number 16 is denied in that the Recommended Order sufficiently addresses St. Joseph's concerns. The Hearing Officer's findings are supported by competent, substantial evidence. See finding of fact number 6.
St. Joseph's excepts to the Hearing Officer's finding of fact number
72 where the Hearing Officer found that adequate hospital services were available to residents in the area where St. Joseph's proposes to construct its satellite hospital. exception number 17 is denied in that St. Joseph argues the weight of the evidence. The Hearing Officer's finding is supported by competent, substantial evidence. The Hearing Officer's finding must of course, be weighed with all other applicable criteria including consideration of the long term financial viability of St. Joseph's, a significant provider of Medicaid services.
St. Joseph's excepts to the Hearing Officer's finding of fact number 73, regarding alternatives to the satellite proposal. Exception number 18 is denied in the St. Joseph argues the weight of the evidence. The Hearing Officer's finding is supported by competent, substantial evidence. See finding of fact number 72.
St. Joseph's excepts to the Hearing Officer's finding of fact number
Exception number 19 is denied in that St. Joseph argues the weight of the evidence. The Hearing Officer' finding is supported by competent, substantial evidence.
20. St. Joseph's excepts to the Hearing Officer's finding of fact number
Exception number 20 is denied in that St. Joseph argues the weight of the evidence. The Hearing Officer's finding is supported by competent, substantial evidence
St. Joseph's excepts to the Hearing Officer's finding of fact number
89 through 90. Exception number 21 is denied in that St. Joseph argues the weight of the evidence. The Hearing Officer's findings are supported by competent, substantial evidence.
St. Joseph's excepts to the Hearing Officer's finding of fact number
This finding is supported by record. Exception number 22 is denied in that St. Joseph argues the weight of the evidence. The Hearing Officer's finding is supported by competent, substantial evidence.
St. Joseph's excepts to the Hearing Officer's finding of fact number 92, regarding St. Joseph's failure to correctly and fully estimate salary expenses. Exception number 23 is denied in that the Hearing Officer's finding is supported by competent, substantial evidence.
St. Joseph's excepts to the Hearing Officer's finding of fact number 93, regarding the inaccuracy of the use rate used by St. Joseph's. This finding is supported by the record. Exception number 24 is denied in that St. Joseph argues the weight of the evidence. The Hearing Officer's finding is supported by competent, substantial evidence.
St. Joseph's excepts to the Hearing Officer's finding of fact number 94, regarding case-mix index. Exception number 25 is denied in that St. Joseph argues the weight of the evidence. The Hearing Officer's finding is supported by competent, substantial evidence.
St. Joseph's excepts to the Hearing Officer's finding of fact number
Exception number 26 is denied in that the Hearing Officer's finding is supported by competent, substantial evidence.
St. Joseph's excepts to the Hearing Officer's finding of fact number
96 through 97. Exception number 27 is denied in that St. Joseph argues the weight of the evidence. The Hearing Officer's finding is supported by competent, substantial evidence.
St. Joseph's excepts to the Hearing Officer's finding of fact number
This finding is supported by the record. Exception number 28 is denied in that St. Joseph argues the weight of the evidence. The Hearing Officer's finding is supported by competent, substantial evidence.
29. St. Joseph's excepts to the Hearing Officer's finding of fact number
Exception number 29 is denied in that St. Joseph argues the weight of the evidence. The Hearing Officer's finding is supported by competent, substantial evidence.
St. Joseph's excepts to the Hearing Officer's finding of fact number 107, regarding the proposed projects effect upon UCH. Exception number 30 is denied in that St. Joseph argues the weight of the evidence. The Hearing Officer's finding is supported by competent, substantial evidence.
St. Joseph's excepts to the Hearing Officer's finding of fact number 108, regarding the proposed projects effect upon Tampa General. Exception number 31 is denied in that St. Joseph argues the weight of the evidence. The Hearing Officer's finding is supported by competent, substantial evidence.
In its exceptions, numbers 32 through 70, St. Joseph's essentially reasserts its proposed findings of fact. The Hearing Officer considered the proposed findings of fact and ruled thereon. Island Harbor Beach Club vs. Department of Natural Resources, 476 So2d 1350 (Fla. 1st DCA 1985). Exceptions numbered 32 through 70 are denied.
St. Joseph's exceptions to the conclusions of law are denied, except as noted in the rulings on the previous exceptions.
RULING ON EXCEPTIONS FILED BY HUMANA OF FLORIDA, INC. (HUMANA)
Humana excepts to findings of fact numbers 6, 27, 48, 79, 80, 98, 99, 100, and 101. The exceptions are denied as the findings are supported by competent, substantial evidence.
Humana's exceptions to the conclusions of law are denied.
FINDINGS OF FACT
The department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order.
CONCLUSIONS OF LAW
The department hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order.
Based upon the foregoing, it is
ADJUDGED, that St. Joseph's Hospital's application for CON #4288 for the transfer of 100 acute care beds to a proposed new satellite hospital be denied.
DONE and ORDERED this 15th day of December, 1987, in Tallahassee, Florida.
Gregory L. Coler Secretary
Department of Health and Rehabilitative Services
by Assistant Secretary for Programs
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 to:
Ivan Wood, Esquire James C. Hauser, Esquire The Park in Houston Center MESSER, VICERS, CAPARELLO, 1221 Lamar Street FRENCH & MADSEN
Suite 1400 Post Office Box 1876
Houston, Texas 77010 Tallahassee, Florida 32302
Theodore E. Mack, Esquire Michael J. Cherniga, Esquire Department of Health and ROBERTS, BAGGETT, LaFACE
Rehabilitative Services & RICHARD
2727 Mahan Drive 101 East College Avenue Fort Knox Executive Building Post Office Drawer 1838 Tallahassee, Florida 32308 Tallahassee, Florida 32301
John Radey, Esquire Howard J. Hochman, Esquire
101 North Monroe Street Southeast Financial Center Suite 1000 200 S. Biscayne Blvd. Tallahassee, Florida 32302 Suite 3700
Miami, Florida 33131
Cynthia S. Tunnicliff, Esquire Donald Conn, Hearing Officer Post Office Drawer 190 Division of Administrative Tallahassee, Florida 32302 Hearings
FALR The Oakland Building
Post Office Box 385 2009 Apalachee Parkway Gainesville, Florida 32602 Tallahassee, Florida 32301
Nell Mitchem (PDDR)
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a copy of the foregoing was sent to the above-named people by U.S. Mail this 17th day of December, 1987.
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
================================================================= DISTRICT COURT OPINION
=================================================================
IN THE DISTRICT COURT OF APPEAL FIRST DISTRICT, STATE OF FLORIDA
ST. JOSEPH'S HOSPITAL, NOT FINAL UNTIL TIME EXPIRES
TO FILE REHEARING MOTION AND
Appellant, DISPOSITION THEREOF IF FILED.
vs. CASE NO. 87-2122
DOAH CASE NO. 86-1542
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, HUMANA OF FLORIDA, d/b/a TAMPA WOMEN'S HOSPITAL, UNIVERSITY COMMUNITY HOSPITAL,TAMPA GENERAL HOSPITAL, and AMI TOWN & COUNTY MEDICAL CENTER,
Appellees.
/ Opinion filed December 21, 1988.
An Appeal from an Order of the Department of Health and Rehabilitative Services.
Herbert T. Schwartz, Houston, Texas, and Judith S. Marbe, Tallahassee, of Wood, Lucksinger & Epstein, for appellant.
Theodore E. Mack, Assistant General Counsel, HRS, for appellee HRS; James C. Hauser and Joy Heath Thomas, of Messer, Vickers, Caparello, French & Madsen, Tallahassee, for appellee Humana; Cynthia S. Tunnicliff, of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, Tallahassee, for appellee University Community Hospital; John Radey and Elizabeth McArthur, of Aurell, Fons, Radey & Hinkle, Tallahassee, for appellee Tampa General Hospital; William L. Hyde and Michael Cherniga, of Roberts, Baggett, LaFace & Richard, Tallahassee, for appellee Town & County Medical Center.
WENTWORTH, J.
Appellant seeks review of a Department of Health and Rehabilitative Services final order denying its application for a certificate of need (CON) for the transfer of 100 acute care beds to a proposed new satellite hospital.
Appellant contends the proposed project is consistent with all statutory and rule criteria, and urges a lack of evidentiary support for the hearing officer's conclusion, adopted by the final order, that the project does not meet a balanced consideration of those criteria. We find that denial of the certificate of need rests on adequate evidence consistent with pertinent law and rules. We therefore affirm.
Appellant, an acute care hospital with 649 licensed beds, filed an application for a certificate of need, seeking approval for a 150 bed general acute care satellite hospital in Carrollwood, Hillsborough County, and proposed the transfer of 150 existing licensed beds from the main facility in Tampa to the satellite. The estimated total cost oil the project was $16,775,000. By letter the department preliminarily denied appellant's application. Appellant filed a petition for formal administrative hearing. Prior to the hearing, appellant and the department executed a stipulation and settlement agreement which provided that the department agreed that there is a need for relocation and transfer of 100 acute care beds and acute care services from appellant's existing hospital to the proposed 100 bed acute care satellite hospital. The stipulation set forth a percentage of the total number of admissions at the satellite hospital which would be rendered to medicaid patients and to non- medicaid charity/uncompensated patients whose family income was equal to or less than the current federal poverty guidelines. Under the agreement appellant agreed that it would request and seek only partial approval of the proposed CON application and the number of licensed beds to be relocated was to be reduced from 150 to 100.
At the hearing, appellant and the department sought partial approval of the CON to conform to the terms of the stipulation and settlement. agreement. The hearing officer entered a recommended order finding that the department currently has no rule specifically governing the transfer of acute care beds, and Rule 10-5.011(1)(m) does not apply to acute care transfers since it addresses new or additional beds. The order found that the department has begun developing a policy for review of acute care transfer applications which do not request additional beds, and that in its current conceptual form, that policy follows the statutory review criteria as they might apply to transfer applications which do not request new beds. Further findings were that the emerging policy urges review of acute care transfer applications with emphasis on such criteria as the reduction of excess beds, better utilization of existing beds, encouragement of hospital efficiency, improvement of financial and geographic access, the encouragement of quality care, and the encouragement of competition in the hospital industry; that appellant's proposal did not address the key elements of the state health plan and the department's nonrule policy calling for bed reduction when transfers are considered; that district VI is overbedded by nearly 700 beds, and that appellant's proposal was inconsistent with the local health plan since it did not reduce the number of excess beds, while at the same time it would transfer 100 beds to an area of the county with a predominantly affluent, young and growing population from which appellant would realize a substantial number of paying, as opposed to indigent or medicaid, patients; that other facilities currently serving the proposed service area would be more likely to achieve optimum occupancy levels if the satellite were not built; that while appellant had the ability to financially support the satellite facility and to internally finance its construction, the construction and operation of the satellite would reduce appellant's overall operating margin, and appellant would be less able to provide charity, indigent and medicaid care after construction of the satellite; that appellant's "proposal to spend approximately $16 million on construction of the satellite to serve from
16 to 26 'new' patients could reasonably be expected to adversely affect health care costs"; and finally that approval of the project would not further the local health plan objective of protecting disproportionate indigent providers, because it would result in a loss by competitor Tampa General Hospital of a significant number of paying patients.
Applying the statutory criteria in section 381.494(6)(c) Florida Statutes, and the department's nonrule policy, the hearing officer concluded that appellant had not met its burden of proof and therefore was not entitled to approval of the portion of the CON at issue.
Appellant's contention, that the order adopting those findings and conclusion erroneously applied standards relevant to CON applications for new acute care beds, is not supported by the record or order. In the recommended order, adopted by the department, the hearing officer explicitly stated that Rule 10- 5.011(1)(m) does not apply to acute care transfers since it addresses new or additional beds. The hearing officer stated that the department had begun developing a departmental policy for review of acute care transfer applications which do not request additional beds and that, in its current conceptual form, the transfer policy follows the statutory review criteria as they might apply to transfer applications which do not request new beds.
A review of the record establishes that in determining appellant's entitlement to the CON, the hearing officer specifically applied the provisions of section 381.494(6)(c), Florida Statutes (1985), as well as the department's nonrule policy for transfer applications. Denial of the application was predicated upon appellant's failure to sustain its burden to show consistency with the state and local health plans as well as the department's nonrule policy. Specifically, appellant failed to establish a need for the transfer of beds based upon geographic or financial accessibility considerations, optimization of existing resources, increased access for indigents and the underserved, lack of available alternatives to serve the area and financial feasibility. The determination was made that appellant's application failed to satisfy several of the criteria enumerated in section 381.494(6)(c).
Appellant's contention that the wrong criteria were applied against which to assess the evidence is therefore without merit. The order appealed correctly determined the question of appellant's entitlement based on a balanced consideration of statutory and rule criteria. See Department of Health and Rehabilitative Services v. Johnson & Johnson, 447 So.2d 361 (Fla. 1st DCA 1984).
Affirmed.
ERVIN and ZEHMER, JJ., CONCUR.
| Issue Date | Proceedings |
|---|---|
| Sep. 08, 1987 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Dec. 21, 1988 | Opinion | |
| Dec. 15, 1987 | Agency Final Order | |
| Sep. 08, 1987 | Recommended Order | Certificate Of Need to transfer acute care beds denied. Failed to show consistencey with state/local health care plans and adverse impact on cost or existing providers |
