STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
FAWCETT MEMORIAL HOSPITAL, )
)
Petitioner, )
)
vs. ) CASE NO. 86-1571
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent, )
and )
) MEDICAL CENTER HOSPITAL, INC., )
)
Intervenor. )
)
RECOMMENDED ORDER
A formal administrative hearing was held in this case in Tallahassee on December 2-4, 1986, to determine whether Respondent, Department of Health and Rehabilitative Services (HRS), should grant the application of Petitioner, Fawcett Memorial Hospital (Fawcett), for a certificate of need to establish an adult cardiac catheterization lab. The parties ordered the preparation of a transcript of the final hearing (which was filed on January 26, 1987) and requested until March 9, 1987, in which to file proposed recommended orders.
APPEARANCES
For Petitioner: E. G. Boone, Esquire
Robert T. Klingbeil, Jr., Esquire Jill A. Contie, Esquire
Post Office Box 1596 Venice, Florida 34284
For Respondent: R. Bruce McKibben, Esquire
Paul B. Smith, Esquire Department of Health and
Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407
Tallahassee, Florida 32399-0700
For Intervenor.: William B. Wiley, Esquire
Post Office Box 2174 Tallahassee, Florida 31316-2174
STIPULATION
Before and during the final hearing, the parties entered into stipulations to narrow the issues.
As to the portions of Rule 10-5.011(1)(e), Florida Administrative Code (1986)1, according to which Fawcett's application is to be judged, the parties stipulated:
Service Availability.
Fawcett is currently providing or is capable of providing all services in this portion of
the Rule.
Service Quality.
Accreditation. Fawcett has full JCAH accreditation for special care units.
Availability of Health Personnel. Fawcett has adequate numbers of properly trained personnel available to meet the requirements of this portion of the Rule.
Staff Training. Fawcett will have an ongoing program of staff education and skills upgrade
in its cardiac cath lab if same is approved.
Coordination of Services.
Fawcett has a written referral agreement with a facility providing open heart surgery services.
Fawcett will not be performing coronary angioplasty, and thus this portion of
the Rule is not applicable.
Fawcett will not be performing pediatric cardiac caths if its certificate of need application is granted.
12. Need Determination.
Under a straight application of the need methodology found at Rule, 10-5.011(e)(1)12, the need for an additional catheterization laboratory in District 8 is not
shown. Rather, Fawcett seeks to show that Charlotte County and District 8 as
a whole are "not normal" and that the CON application should be granted "even in the absence of an absolute numeric need under the formula."
The parties also stipulated that the equipment proposed by Fawcett for its cardiac cath lab will be adequate for the purposes of cardiac cath and to provide quality of care service to its patients, and such equipment can be purchased and installed for the cost shown in Fawcett's CON application.
As to the criteria in Section 381.494(6)(c), Florida Statutes (1985), according to which Fawcett's application is also to be judged in this proceeding, the parties stipulated:
Criterion 3, concerning quality of care which will be rendered by Fawcett, is at issue in this proceeding on the limited issue of Fawcett's ability to prove it will perform the necessary number of procedures in order to ensure proficiency and comply with the Rule.
Criteria 4, 6, 7, 10, 11 and 13 are not applicable.
Criterion 8 is at issue in this proceeding with respect to the extent to which the proposed service will be accessible to all residents of the service district. The other elements contained in Criterion 8 are either met by Fawcett or are not applicable to this proceeding.
Criterion 9 is at issue in this proceeding with respect to long- term financial feasibility. Short-term financial feasibility (Fawcett's ability to raise funds necessary for equipping its cardiac cath lab) is not at issue.
As to the specific criteria in 381.494(6)(d), Florida Statutes (1985), according to which Fawcett's application also is to be judged, the parties stipulated that subsections 3 and 5 are not in dispute in this proceeding.
Except as expressly stipulated, all other criteria of Section 381.494(6)(c) and (d), Florida Statutes (1985), and all other portions of Rule 10-5.011(1)(e), Florida Administrative Code (1986), remain in issue.
FINDINGS OF FACT
Fawcett's Application.
Petitioner, Fawcett, is a 254 bed acute care hospital located in Port Charlotte, Charlotte County, Florida. Its primary service area is Charlotte and DeSoto Counties, Florida. Fawcett's secondary service area includes parts of Sarasota and Lee Counties, and all of Glades County. Fawcett timely filed an application for a CON to establish an adult cardiac catheterization lab at its facility in Port Charlotte, Florida, on October 15, 1985. Fawcett's application was denied by Respondent, HRS, on February 28, 1986.
Fawcett's proposed cardiac cath lab would be located in the special procedures suite at Fawcett, specifically, special procedures Room NO. 2. It is the intention of Fawcett that the cath lab operate in conjunction with the special procedures laboratory as it exists currently at Fawcett.
The cardiac cath lab will have an open staff policy, meaning that any physician meeting the training and experience criteria under the medical staff bylaws will be able to participate in the lab. Regular service hours will be from 7:00 a.m. to 4:30 p.m., Monday through Friday. In addition to this, the lab will be capable of providing emergency care twenty-four hours a day, seven days a week.
Cardiac cath services will be available to all persons regardless of race, ethnic minority, sex, handicap, and inability to pay who, by physician's order, are in need of a cardiac cath.
Fawcett proposes to open the cardiac cath lab as soon as is practicable, setting a target date to open no later than July 1, 1987.
Need.
Rule 10-5.011(1)(e)12, Florida Administrative Code (1986), states that need for a cardiac cath lab is to be determined by computing the projected number of cardiac cath procedures in the service area, using a mathematical formula. "Service area" is defined as the entire HRS district, in this case District 8. Utilizing this formula, the actual use rate in the service area for the 12-month period beginning 14 months prior to the letter of intent deadline for the batching cycle is multiplied by the projected population in Year "X", the year in which the proposed cardiac cath lab would begin service, to give a projected number of cath procedures for Year "X". This projected number of cath procedures is then divided by 600 (the average number of caths required by the rule to be performed per year by existing and approved labs) to yield the number of labs needed in the District. Utilizing this formula, a mathematical need is not shown for District 8. Indeed, the rule methodology shows a need for only five cardiac cath labs in District 8 in July, 1987, and there already are seven existing and approved labs in District 8, not counting Fawcett's proposed lab.
Rule 10-5.011(1)(e)6, Florida Administrative Code (1986), states that "[t]he Department will not normally approve applications for new cardiac cath laboratories in any service area unless additional need is indicated." (Emphasis added.)
Mortality Rate.
Charlotte County has a significantly higher mortality or death rate per 100,000 persons than either the State of Florida or the United States as a whole. Charlotte County's mortality rate is high even when compared to the rest of District 8.
The mortality rate from cardiovascular disease in District $ is likewise high. The mortality rate from heart disease in District 8 is 453.2 per 100,000 deaths, with the rate for Florida being 389.4 per 100,000 deaths, and the United States 325 per 100,000 deaths. In contrast to the death rate in other District 8 counties due to cardiovascular disease, Charlotte County's rate of mortalities due to cardiac disease is 619 per 100,000 deaths.
Cardiac cath has become the standard treatment modality for dealing with serious cardiovascular disease. Cardiac cath has the potential to greatly decrease deaths due to cardiovascular disease in Charlotte County, where there is a large patient population in Charlotte County who could benefit from this service.
Population Growth.
Charlotte County has a very high rate of population growth in relation to Florida and the rest of the United States. The rate of growth between 1986 and 1991 will be approximately 23 percent, compared to Florida's overall growth rate of approximately 11 percent and the United States' growth rate of 3 percent. Charlotte County ranks ninth in the United States in terms of population growth from 1980 to 1985 for counties with populations of 50,000 or more.
A large proportion of the overall 23 percent growth rate is comprised of the elderly population, aged 65 and over. The 65 and over population is
expected to grow by 31 percent between 1986 and 1991 in Charlotte County. This is compared to a projected 18 percent growth of this group in Florida, and a projected 11 percent growth in the United States as a whole for the same time period.
Elderly Population.
Charlotte County has a population which is heavily weighted toward the elderly when compared to Florida and the United States. An estimated 36.5 percent of the Charlotte County population is aged 65 and over, compared to 19 percent for the State of Florida and 12 percent in the United States as a whole. Fawcett is dependent on the elderly population for its patients, including in the area of cardiac-related services. The majority of cardiac cath patients in Charlotte County are taken from the 65 and over population.
Upward Trend in Number of Cardiac Caths.
Cardiac cath is the process of taking a sterile plastic tube and placing it into the left or right section of the heart. This allows the cardiologists to perform a combined study, obtaining pressures from the right and left ventricles, as well as injecting dye into the heart's various arteries to take pictures. These two combined studies allow the physician to make as accurate a diagnosis as possible.
Cardiac cath has become very important in recent years, so much so that hospitals with advanced cardiac programs which are willing to make the commitment should have cardiac cath to ensure state of the art quality care to the patients. Cardiac cath has become a routine procedure in the treatment of heart- related disorders. Patients with a myocardial infarction (development of lack of blood flow to the heart muscle) are now immediately cathed and diagnosed. This is important in light of the major advances recently made in angioplasty, a non-surgical method of treating blocked cardiac vessels. The current treatment modality is to get information on the problem immediately and reopen the blood vessel that is obstructed to allow blood to get in the heart muscle, thereby avoiding further damage to the heart muscle.
There has been a consistent trend upwards in the rate of cardiac caths performed in District 8 relative to its population. The actual use rate for cardiac caths has increased, and the 1986 use rate is higher than the use rate utilized by the rule methodology. In other words, the use rate called for in the rule understates what is actually happening in 1986. The use rate increased approximately 40 percent between 1985 and 1986.
The Charlotte County area has experienced an increase in the rate of growth of cardiac caths overall.
The evidence reveals an upward trend in utilization of cardiac cath on a national scale. Cardiac cath probably will become a more and more prevalent treatment modality and therefore should be more readily available, with wider application of technological advances, in the future.
As more caths are done, the procedure becomes safer and more accessible to people. Medical science has now made it possible for 20 to 30 percent of all persons who suffer heart attacks to be treated without major cardiac surgery, i.e., via a technique called angioplasty, whereby an occlusion
or blockage is decreased by the expansion of a balloon in the diseased vessel. Cardiac cath is a necessary step in identifying the need for the angioplasty procedure.
Fawcett's Degree of Reliance on the Elderly Population and Its Cardiac Programs.
Fawcett is unusual in its degree of reliance on the elderly population. Over two-thirds of all Fawcett's patients are Medicare patients (over age 65), an unusually high number of elderly patients.
Approximately 20 percent of Fawcett's 1985 admissions were cardiac disease related. These patients constitute a large percentage of Fawcett's patient revenues. In an area like Port Charlotte, which is so heavily populated with the elderly, it is desirable from the standpoint of patient care to have needed cardiac cath services available to patients at their primary care hospital. Fawcett is the primary care hospital for a large portion of the Charlotte County population.
New Service at Minimal Cost.
Fawcett proposes to establish its cardiac cath lab at a cost of roughly $90,700. This is a relatively small capital expenditure to add a new cardiac cath service to a facility. Many hospitals must make expenditures of as much as $1,000,000 to add a cardiac cath lab to their facilities. Fawcett already has the bed capacity to handle any additional inpatients which may result from the addition of a cath lab. No recruiting of physicians or the cost associated with such recruiting would be involved. Fawcett currently has 11 cardiologists on staff. Additionally, the rule requires that a certified or board eligible cardiologist be director of the cardiac cath lab, and Fawcett has several certified cardiologists on staff who qualify for this position.
Medical Center And Other District 8 Providers.
Intervenor, Medical Center Hospital (Medical Center) is a 208-bed facility. 52 beds are used for substance abuse psychiatric service, 156 are acute care beds with psychiatry, oncology, and cardiac facilities. The hospital is a not-for-profit hospital. Medical Center has a Medicaid provider number and has had one for at least seven years. For 1984, Medical Center provided approximately $37,000 worth of charity care; $105,000 for 1985; and through December 4, 1986, $258,000. The amount was anticipated to be as high as
$350,000 for 1986.
Medical Center is in Punta Gorda, 5 1/2 miles south of Fawcett. Medical Center's primary service are is Charlotte County; it draws approximately
90 percent of its patients from Charlotte County. The remaining ten percent come from Lee, Sarasota and DeSoto, with some as far as Hardee County. The only cardiopulmonary services not offered by Medical Center are open- heart surgical procedures and angioplasty, which goes along with open-heart.
There are no conditions existing at Medical Center with respect to the lab that would preclude its availability to patients who might be in need of a cardiac cath. Medical Center has an open cardiac cath lab staff. Dr. Rosenfield and Dr., Popper presently do cardiac caths at the hospital but do not perform cardiac caths at any other laboratory in the District now. From March, 1985 through June, 1986, 57 caths were performed at the Medical Center lab. But
from January, 1986, through November 1986, 194 caths were performed. Medical Center estimates that they will perform approximately 250 cardiac caths during calendar year 1986, and 486 are projected for calendar year 1987,
Medical Center's cardiac cath lab is currently open 8 hours a day, 5 days a week, 52 weeks a year. The maximum capacity for the cath lab is 2,080 procedures a year. It is a shared lab with the hospital special procedures room. The shared procedures have not caused Medical Center to have any scheduling problems with the laboratory yet, but optimal capacity probably is about 1040 caths per year under present conditions. The Medical Center lab is not over-utilized at this point in time. There is no reason why Medical Center could not perform the 650 projected procedures in 1987 for Charlotte and DeSoto counties; 675 for 1988, 694 for 1989, or 727 for 1990.
Approval of a new cardiac cath lab at Fawcett would have an adverse economic affect on Medical Center's cardiac cath lab. Medical Center Hospital operates on a fairly tight margin for profitability. There would be potential impact on the level of indigent care offered at Medical Center if its profit margin should decline due to a loss of patients. Medical Center might not give the same amount of indigent care that it would have given otherwise.
Medical Center projects, for 1987, to perform 486 procedures at $1,250 charge per procedure. If approximately 21 procedures (4.3 percent of the total) are drawn away from Medical Center in 1987, Medical Center probably would be a minus-loss situation rather than a plus-profit situation.
Fawcett's projected market share of the number of the projected caths to be performed in 1987 for Charlotte and DeSoto counties, i.e., 650, would mean that Fawcett would do approximately 260 cases. Charlotte and DeSoto counties are the primary area in which Medical Center receives its cardiac cath referrals. It is probable that Fawcett would capture at least 4.3 percent of the total of referrals from Charlotte and DeSoto Counties since they project a
40 percent market share from the same area.
Including the lab at Medical Center, there are seven existing or approved cardiac cath labs within District 8. The labs are accessible in terms of financial availability to individuals such as Medicaid and indigent patients as well as Medicare, insurance, and private pay. They are also geographically located such that access is available throughout the entire District. There was no evidence to suggest that over 10 percent of the District 8 population is two hours away from cardiac cath services. There is sufficient capacity at the existing labs to take on additional patients. No information was provided HRS to indicate that physicians have had patients who were unable to receive services at the existing facilities or that the quality of services within those labs was such that it was detrimental to individuals in need of a cardiac cath within the area.
At this time, Medical Center's cath lab, 5 1/2 miles south of Fawcett, is underutilized. There was no evidence that District 8 existing and approved cath labs are over-utilized or that quality of care is suffering from over- utilization.
Other Circumstances.
The medical population is growing faster in Port Charlotte than in Punta Gorda. Fawcett and St. Joseph's Hospital are located across the street from one another and are the largest facilities in Port Charlotte. Both hospitals together have the ability to draw a large number of patients.
Medical Center, on the other hand, is the smallest hospital in the area. Cardiac procedures are rapidly increasing in volume and as the number of cardiac patients in the area increase, Medical Center will be filling more and more of its beds with cardiac patients if it has the only cath lab in the county. However, Medical Center's medical-surgical beds are only 55 percent occupied, and there is ample room at Medical Center to accommodate growth in cardiac caths up to maximum capacity at Medical Center's lab.
An indefinite but small number of patients choose not to have cardiac caths that are indicated because the service is not available at Fawcett, their primary care provider. A cath lab at Fawcett would enhance quality of care to those persons, alleviate the trauma of transferring to another hospital, and eliminate duplicate billing occasioned by such transfers.
When Fawcett opened, it had a fully equipped intensive care unit that has been upgraded with time so that Fawcett now has a complete non-invasive cardiology program in operation.
Fawcett's cardiopulmonary department has grown since the opening of the hospital. When it opened, the hospital only provided basic 12-lead electrocardiograms. Since then Fawcett has added 24-hour holter monitoring, cardiac stress testing and echocardiography, and performs two-dimensional echocardiograms. In addition, the hospital has a peripheral vascular diagnostic lab, and recently has started MUGA testing.
Catheterizations are already being performed at Fawcett on a daily basis. Qualified physicians are currently catching every part of the body but the heart, utilizing state of the art procedures and equipment. The provision of cardiac cath is the next logical step in Fawcett's growth and desire to provide a full range of services to its patients.
The safety of cardiac cath has been enhanced due to the increased numbers being performed, in that proficiency increases with practice. Accessibility has increased both as to numbers of physicians performing cardiac caths, as well as facilities providing the service. Also, the procedure of angioplasty is increasing in use, and cardiac cath is a prerequisite to angioplasty. Aflgioplasty is a major alternative to cardiac surgery.
Fawcett is well-qualified to provide cath lab services with the idea of eventually expanding its cardiac services into other areas of cardiac care, i.e., angioplasty and open heart surgery. The addition of a cath lab at this time is a logical and necessary step toward this goal.
At present, Fawcett patients requiring cardiac cath are sent to anther facility providing the service, usually Ft. Myers Community Hospital (FMCH). Fawcett's procedure when transferring a patient is to discharge the patient from the hospital. If it is an emergency situation, he or she would be transferred via the Charlotte County Ambulance Service or by Air Ambulance through an arrangement with that service out of Tampa. A transfer to FMCH could be accomplished by air ambulance in under 30 minutes if the helicopter were based
at Fawcett. But the total time from the request for the Tampa-based air ambulance to arrival at FMCH is more than 30 minutes. By ground ambulance, the 31-mile trip from Fawcett to FMCH takes approximately 40 minutes.
Transferring a patient in cardiac distress is not without its costs, to the public as well as the patient, the patient's family, and the doctor involved. Every time an ambulance makes that transfer, it is at a cost of several hundred dollars. The patient, the patient's family and perhaps the physician must commute from one facility to the other. Visiting can become a problem because of the travel involved. Transferring a patient also involves a risk to the patient's health because of the trauma of riding in an ambulance. Patients suffer a loss of comfort and continuity of care in having to leave familiar surroundings and familiar doctors.
Dr. Collado and other cardiologists in his group, on staff at Fawcett, are unwilling at the present time to transfer patients to Intervenor, Medical Center Hospital (Medical Center), for a cardiac cath because of Medical Center's perceived lack of a proven "track record." These doctors watch a program, see how the program and its physicians perform and how the patients feel about that program, and establish their own relationship with the physician to whom they refer patients, before routinely transferring patients to that physician.
Because of this, Dr. Collado presently sends all of his patients to FMCH or Lee Memorial. This is not a minor undertaking. Dr. Collado's group alone refers out at least 100 patients a year in cardiac cath, some years close to 200 patients. Without a cardiac cath lab at Fawcett, considering the medical advances made in the treatment of cardiac disease, it is envisioned that in two or three years, Fawcett will have to transfer more and more patients in order to keep up with common cardiology practices. But more and more of these patients could be transferred to Medical Center, a five to ten minute drive south in Punta Gorda, instead of to Ft. Myers as Medical Center's track record becomes more established.
HRS' Policy.
Before former Rule 10-5.11(15) [now 10-5.011(1)(e)] was amended, HRS locked applicants into a 1981 use rate. Under this policy, HRS would use the rate at which cardiac caths were performed in 1981 to determine need in the applied-for year. Fawcett's original application, filed in October, 1985, was reviewed and denied under this use rate. Since Fawcett's original review, however, the rule was amended in June 1986.
The new rule provides that need is determined using the actual use rate (number of procedures per hundred thousand population) in the service area for the 12-month period beginning 14 months prior to the letter of intent deadline for the batching cycle.
Less than two months prior to Fawcett's hearing, HRS' policy was to utilize a planning horizon that was fixed by the application's submittal date. If a formal administrative hearing was held, HRS then applied the need methodology using current population and utilization data available for the most recent 12-month period before hearing. This resulted in the use of more current data than had been used previously or, often, is used now.
Three months prior to Fawcett's final hearing, HRS issued three CONs, Nos. 3539, 3964 and 3971, at the same time for the establishment of cardiac cath labs in District 6. One application was filed in October, 1984, targeting the
July, 1986, planning horizon, and the other two were filed in April, 1985, for the January, 1987, planning horizon. These applications were initially reviewed under a 1981 "use rate" and denied due to lack of need under the methodology for the given horizon. Subsequently, HRS reconsidered its position on the CONs under the "use rate" as amended in the rule and utilized data from the most recent twelve month period. As a result of this review, 2 cath labs were approved in the same city, Bradenton, and another in Brandon. However, a need for all of these applications also would be shown using a strict interpretation of the current rule, as urged by HRS in this case.
In this case, HRS urges a strict interpretation of the rule to lock utilization data regarding district cath labs on the 12-month period beginning
14 months before the letter of intent deadline. But HRS urges looking at current data as of the hearing date in counting approved cath labs.
Long Term Financial Feasibility and Quality of Care.
Fawcett's proposed project shows a profit by its second year of operation.
There will be sufficient utilization of the proposed cardiac cath lab. Projected utilization of Fawcett's cardiac cath lab was derived by first multiplying the projected total population of Charlotte and DeSoto Counties (Fawcett's primary service area) for the first two years the cath lab will operate by the projected 1986 use rate to give the total number of cardiac caths for these counties. Fawcett will capture approximately 40 percent of the Charlotte County and DeSoto County cardiac cath market in its first year of operation, increasing to 50 percent in the second year. Forty percent of the total caths in Year 1 would give Fawcett 274 caths in its first year of operation. Fifty percent of the total caths in Year 2 would give Fawcett 355 total caths in its second year of operation. These projections are reasonable and obtainable.
Utilization will surpass 300 procedures per year by the second year of operation, enough caths for its staff to remain proficient, satisfying both Rule 10-5.011(1)(e)'s minimum volume requirement and the sole issue regarding quality of care not already stipulated by the parties.
Fawcett's pro forma for the cardiac cath project is based on reasonable and realistic assumptions:
The charge per cath is $1,250 for the first year,
with an inflation of 5 percent for the second year. This assumption was based upon average charges from area
labs.
The contractual allowances or the difference in charges and actual reimbursement for Medicare patients are based on the hospital's historical experience for Medicare patients.
Uncollectible charges were forecast as 6.2 percent of patient service revenue, based upon historical experience of uncollectible charges (4.9 percent) and
an assumption that approximately 2.3 percent of revenues would be service to Medicaid patients. Fawcett
does not have a Medicaid provider number and will not be reimbursed for these patients, so these are
treated as uncollectible.
Salaries and wages were based on area averages of approximately $12.60 an hour for a trained cardiac technician at 2,080 hours a year. Employee benefits were based on the hospital's current budget of approximately 19.7 percent of salaries and wages for employee benefits.
The assumption for supplies and other expenses was based on discussions with the people at the hospital and FMCH's experience.
e. Repairs and maintenance depreciation assumes an eight year life on the equipment and an equipment purchase price of $90,230.
g. Federal and state income tax assures an overall corporate rate for Basic American Medical, Inc. of
34 percent for federal tax, and 5 1/2 percent for State tax.
Based on these assumptions, the proposed cath lab is financially feasible, with a projected net income of nearly $35,000 the first year, and
$65,000 the second year. These numbers reflect the relatively low fixed cost involved in the project. In fact, Fawcett's break-even point is less than 140 cardiac caths per year.
Indigent Care.
Fawcett is willing to condition its CON on the provision of 5 percent care to indigent patients. But Fawcett does not have a Medicaid provider number and its commitment to provide indigent care is suspect. Currently, 4 percent of Fawcett's patients are non-paying, this includes charity indigent care and bad debt. According to HCCS data, Fawcett did no Medicaid and its deductions from revenue for charity work was only one-tenth of one percent in 1985. Without a Medicaid provider number, Fawcett would be writing off approximately $7,500 in Medicaid revenue if it provided 2.3 percent care to Medicaid patients. This is additional financial disincentive from meeting or exceeding its projected Medicaid service.
As stated in its application, Fawcett's proposed policy for its cath lab will be to treat Medicaid patients in need of the service, regardless of ability to pay. But actual Medicaid care provided under the policy is dependent upon the actual number of Medicaid patients Fawcett's doctors refer for cardiac cath.
CONCLUSIONS OF LAW
Review of Fawcett's application for a certificate of need (CON) to establish an adult cardiac catheterization lab is made against the criteria in Section 381.494(6)(c) and (d), Florida Statutes (1985), and in Rule 10- 5.011(1)(e), Florida Administrative Code (1986), subject to the stipulations the parties entered into in this case on some of the criteria.
An applicant must carry the burden of proof that it meets the statutory and rule criteria for, and is entitled to, a CON. Boca Raton Artificial Kidney Center v. Department of Health and Rehabilitative Services,
475 So.2d 260 (Fla. 1st DCA 1985). No single criterion is necessarily determinative. Section 381.493, Florida Statutes (1985), provides for a "balanced consideration of all relevant criteria." North Ridge General Hospital, Inc. v. NME Hospitals, Inc., 478 So.2d 1138, 1139 (Fla. 1st DCA 1985).
The appropriate weight to be given
to each individual criterion contained
in the statute regarding CON applications is not fixed, but rather must vary on
a case-by-case basis, depending on the facts in each case.
Id. Accord, Department of Health and Rehabilitative Services v. Johnson & Johnson Home Health Care, Inc., 447 So.2d 361 (Fla. 1st DCA 1984).
Rule 10-5.011(1)(e)6, Florida Administrative Code (1986), provides:
The Department will consider applications for cardiac catheterization laboratories in context with applicable statutory and rule criteria. The Department will not normally approve applications for new cardiac catheterization laboratories
in any service area unless additional need is indicated, as calculated by the formula in sub-paragraph 12 below, and unless the application satisfies the requirement set forth in sub-paragraph
15. (Emphasis supplied.)
However, when an applicant seeks a CON for a cardiac catheterization
lab:
There are two ways for a hospital to demonstrate `need' as required for issuance of a CON. The hospital can
either strictly apply the formula contained in Rule 10-5.11(15)(1), Florida Administrative Code, [now numbered
Rule 10-5.011(e)12, Florida Administrative Code (1986)], which gives the projected number of CCLs needed in a particular district for a given year, or a hospital must demonstrate abnormal circumstances
justifying departure from the calculation.
NME Hospitals, Inc. v. Department of Health and Rehabilitative Services, 494 So.2d 256 (Fla. 1st DCA 1986).
The parties have stipulated that there are currently seven existing or approved cardiac cath labs (CCLs) in HRS District 8. District 8 is comprised of Sarasota, DeSoto, Charlotte, Glades, Hendry, Collier and Lee counties. The overall "need" for an additional CCL is measured on a district-wide basis as opposed to a sub-district or county-wide basis. Applying the formula in Rule
10-5.011(e)12, Florida Administrative Code (1986), the projected number of CCLs needed in District 8 in 1987 (the appropriate planning horizon) is 4.59 or 5 CCLs. As a result, there is no numerical need for an additional CCL in District 8.
Since there is no numerical need under the rule methodology, Fawcett "must demonstrate and there must be some finding of fact that, without the
requested lab, the existing facilities are (or will be) unavailable or inaccessible, or the quality of care is (or will be) suffering from over- utilization, or other evidence of that nature (citations omitted)." Humana, Inc.
v. Department of Health and Rehabilitative Services, 492 So.2d 388, 392 (Fla. 4th DCA 1986). See also, Humana, Inc. v. Department of Health and Rehabilitative Services, 469 So.2d 889, 891 (Fla. 1st DCA 1985). No evidence was offered by Fawcett to demonstrate that existing labs are unavailable or inaccessible. No proof was offered to sustain a finding that quality of care in the District is suffering from over-utilization. To the contrary, the evidence in this record demonstrates exactly the opposite. Further, there was no other "evidence of that nature" to sustain a showing of "not normal" circumstances to support the institution of a cath lab at Fawcett.
"[T]he effect of consideration of a `not normal' circumstance pursuant to Rule 10-5.11(15)(f) [now Rule 10-5.011(1)(e), Florida Administrative Code] is that sub-part (15)(1)[now (e)12.], which contains the 1981 [appropriate] use rate and sub-part (15)(o)[now (e)15.a.I], which contains the 600 procedures standard for allocation among laboratories, no longer necessarily apply. Need must be assessed upon all the evidence if a `not normal' need is proposed by an applicant." NME Hospitals, Inc. v. Department of Health and Rehabilitative Services, .494 So.2d at 256, citing with authority to a conclusion of law of the hearing officer in NME, Inc. v. Department of Health and Rehabilitative Services, 7 F.A.L.R. 3081, 3097 (DHRS, Recommended Order, January 16, 1985; Final Order, May 23, 1985). According to the NME decision, it is not proper to use the 1986 estimated use rate for District 8 and divide the number of projected caths in 1987 by 600 to arrive at a mathematical "need" for 8.1 CCLs in 1987, which, given the number of existing and approved labs, yields a net need for 1.1 CCLs. Fawcett's method of projecting a numerical need for additional CCLs is contrary to HRS' numerical need methodology. See Health Quest Realty v. DHRS, 477 So.2d 576, 579 (Fla. 1st DCA 1985); Turro v. DHRS, 458 So.2d 345 (Fla. 1st DCA 1984). Additionally, it is inappropriate to use Fawcett's estimate of the number of cardiac baths to be performed in 1986 because the information derived by Fawcett's expert was incomplete and only included, at best, ten months of 1986. See Health Care and Retirement Corp. of America v. Department of Rehabilitative Services, 489 So.2d 789, 791-92 (Fla. 1st DCA 1986).
While it may be said that use of the July 1, 1984, through July 30, 1985, use rate may tend to understate the projected number of catheterizations which will be performed in subsequent years, it is also true that the 600 standard is only about 50 percent of optimal capacity and "constitutes a rather low threshold number for commencement of a new laboratory." 7 F.A.L.R. at 3091. See also Humana, Inc. v. DHRS, 492 So.2d at 391. In short, the 600 standard over-predicts need. Moreover, and as concluded above, it is inappropriate as a matter- of law to use the 600 procedure standard to derive the projected number of CCLs in 1987 once numerical need has not been shown under the HRS rule. The requisite focus is "not normal" facts-- not mathematical computations.
Even using the estimated 1986 use rate (which generates a projected number of caths in 1987 of 4,846), the 7 existing and approved laboratories would be easily able to handle this need since the average, spread among these laboratories, would be 692.29 procedures per laboratory. (Eight labs would average 605.75 procedures.)
Cardiac catheterizations are currently available in District 8 within a maximum automobile travel time of 2 hours, under average travel conditions, for at least 90 percent of the service area's population. Fawcett does not
contend and did not prove otherwise. See Rule 10-5.011(1)(e)8.a, Florida Administrative Code (1986). In addition, there is no indication in the record that the existing cardiac catheterization laboratories do not have the capability of rapid mobilization of a study team for emergency procedures 24 hours a day, 7- days a week, as required by Rule 10-5.011(1)(e)8.b., Florida Administrative Code (1986). However, while Fawcett has executed a referral agreement with Ft. Myers Community Hospital for potential open heart surgical patients, Fawcett does not meet the 30 minute travel time requirement under Rule 10-5.011(1)(e)9.c.(I), Florida Administrative Code (1986).
Further, Rule 10-5.011(1)(e)8.c, Florida Administrative Code (1986), also requires:
Cardiac catheterization shall be available to all persons in need. A patient's eligibility for cardiac catheterization shall be independent of the ability to pay. Cardiac catheterization services shall be
available in each service area to Medicare, Medicaid and indigent patients in need.
While it can be said that Fawcett provides a substantial service to Medicare patients, it is equally true that it does not have a track record of affording care to Medicaid and indigent patients.
Fawcett's project is primarily supported by: (1) institution-specific contentions and facts; and (2) factors taken into consideration in the promulgation of Rule 10-5.11(15), Florida Administrative Code. As to the former, health care planning should not be done on an institution-specific basis. See generally Psychiatric Institutes of America, Inc. v. Department of Health-and Rehabilitative Services, 7 F.A.L.R. 5594, 5595 (DHRS November 6, 1985); Humana of Florida, Inc. v. Department of Health and Rehabilitative Services, 6 F.A.L.R. 1776, 1782 (DHRS January 17, 1984). See also Morton F. Plant Hospital Association, Inc. v. State, Department of Health and Rehabilitative Services, 491 So.2d 586 (Fla. 1st DCA 1986). As to the latter, factors taken into consideration in a rule need methodology are, as a matter of law, not "abnormal" circumstances, Humana, Inc. v. Department of Health and Rehabilitative Services, 492 So.2d 388 (Fla. 4th DCA 1986); Health Care and Retirement Corp. of America v. Department of Health and Rehabilitative Services, 489 So.2d 789 (Fla. 1st DCA 1986; Health Quest Realty XII v. Department of Health and Rehabilitative Services, 477 So.2d 576 (Fla. 1st DCA 1985).
There has been no showing that District 8, the appropriate community to be considered, is in need of this particular project. See Section 381.493(2), Florida Statutes (1985). In fact, Fawcett has failed to prove that there is reason to question the availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and the adequacy of existing CCLs in District 8. Section 381.494(6)(c)2., Florida Statutes (1985). The existing CCLs in District 8 are available, adequate and accessible, both on a geographic and economic basis, to serve the needs of the district. Further, the needs of the community could be enhanced by referral agreements under which hospitals such as Fawcett would refer their cardiac cath patients to neighboring hospitals for the particular cardiac cath procedures to be performed. Section 381.494(6)(c)5., Florida Statutes (1985).
Fawcett's evidence was sufficient to prove the financial feasibility of its proposed project. Fawcett's success will come at the expense of existing and approved CCLs in District 8, especially Medical Center. A reduction in the number of cardiac caths performed by Medical Center could turn a slim profit margin into a loss with the reduction of approximately 21 procedures in a given year. This is more likely than not, especially if any credence is given to Fawcett's projections for 1988 and 1989. But this is not necessarily "bad" competition under Section 381.494(6)(c)12., Florida Statutes (1985). Medical Center did not fully explain how it established its breakeven point for 1987. There could well be fat in Medical Center's budget which could be trimmed given motivating competition.
Fawcett did not prove that there are no less costly, more efficient, and more appropriate alternatives to the services proposed to be offered by Fawcett. Section 381.494(6)(d)1., Florida Statutes (1985). Existing facilities providing services similar to those proposed by Fawcett are available and accessible without any capital investment. Fawcett's capital investment is expected to be only $90,700. Medical Center's investment in upgrading equipment for its cath lab was only $70,000 to $80,000. But Fawcett did not prove that was Medical Center's only capital investment. If it had, the capital investments of both of these two competitors would be small compared to other operating expenses, especially staffing and supplies. Under those circumstances, rather than setting charges to pay for capital investments, Fawcett and Medical Center might be more likely to set their charges competitively, perhaps reducing charges, and to work to cut operating expenses. Had those facts been proven, Fawcett might have been able to prove that adding its cath lab would have been the least costly, most efficient and most appropriate alternative.
Patients in District 8 have not experienced, and are not expected to experience, serious problems in obtaining cardiac catheterizations in the absence of the Fawcett project, and it was not proved that the existing services are not being provided in an appropriate and efficient manner. See Section 381.494(6)(d)2 and 4, Florida Statutes (1985).
Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that Respondent, Department of Health and Rehabilitative Services, deny the application of Petitioner, Fawcett Memorial Hospital, for certificate of need to establish an adult cardiac catheterization lab, CON Action NO. 4313.
RECOMMENDED this 6th of April, 1987 in Tallahassee, Florida.
J. LAWRENCE JOHNSTON 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 6th day of April, 1987.
ENDNOTE
1/ Since the final hearing, the applicable rules have been re-numbered. Throughout this Recommended Order, the rules will be cited by their new numbers, and the stipulations of the parties also are modified to reflect the new numbers.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-1571
These rulings on the parties' proposed findings of fact are made to comply with Section 120.59(2), Florida Statutes (1985).
Petitioner's Proposed Findings Of Fact.
1.-6. Accepted and incorporated.
7. "Quality" modified by "state-of-the-art." As modified, accepted and incorporated.
8.-9. Accepted and incorporated.
Conclusion of law and unnecessary.
Accepted and incorporated.
Accepted and incorporated except the characterizations "even greater significance" and "extremely high" are rejected as argument.
Accepted and incorporated.
Last sentence rejected as conclusion of law; otherwise accepted and incorporated.
Last sentence rejected as conclusion of law; second to last sentence rejected as not proved; otherwise accepted and incorporated.
Last sentence rejected as conclusion of law; characterizations "extremely so," "thus extremely" and "particularly" rejected as argument; otherwise, accepted and incorporated.
Last clause of last sentence rejected as not proved; characterization "dramatic" rejected as argument; otherwise, accepted and incorporated.
First sentence accepted and incorporated; rest rejected as not proved.
Accepted and incorporated.
First two sentences accepted but subordinate and unnecessary; fourth sentence rejected as not made understandable and not proved; rest accepted and incorporated.
Accepted and incorporated.
Characterization of "reliance" as "substantial" rejected as argument; rest accepted and incorporated to the extent necessary.
Rejected in part as argument; otherwise, accepted and incorporated.
Accepted and incorporated to the extent necessary.
Rejected as cumulative and argument.
Rejected as contrary to facts proved. What is questionable about Sommerville's testimony is the inference that operating expenses could not be cut to
make cardiac more profitable, given the motivation of competition.
Rejected as not proved.
Accepted and incorporated.
Last sentence rejected as not proved; rest accepted and incorporated.
Rejected. First sentence not proved; all institution- specific and irrelevant.
Rejected as institution-specific and irrelevant.
Rejected because it assumes Fawcett would develop a "track record" quicker than Medical Center can with a head start.
Accepted and incorporated, with the additional finding that the number is indefinite but small.
Last sentence accepted and incorporated; rest rejected as cumulative, argument and subordinate.
35.-36. Rejected as cumulative.
37.-38. Rejected as conclusion of law, argument and, in this case, unnecessary. This proposed finding would be relevant and necessary in a case challenging the addition of a lab by an existing provider without CON review.
39.-40. Accepted and incorporated.
Rejected as cumulative, argument, institution- specific and irrelevant.
Accepted and incorporated.
In part accepted and incorporated; in part rejected as cumulative, argument, institution-specific and irrelevant.
Rejected as not proved, institution-specific and irrelevant, argument and cumulative.
First sentence rejected as irrelevant (wrong planning area); "best qualified" in second sentence rejected as not proved; rest accepted and incorporated.
Rejected as not proved. With modifications that Fawcett does not have to transfer patients to
Ft. Myers and that Ft. Myers is not really within
30 minutes of Fawcett by air ambulance under present conditions, incorporated.
Accepted and incorporated.
Rejected as cumulative.
Last sentence rejected as not proved; "MC's lack of a proven track record" in first sentence rejected as not proved, but only "perceived"; rest accepted and incorporated.
Accepted and incorporated along with additional findings.
Rejected as argument.
52.-54. Rejected, to the extent illogical inconsistencies in the current interpretation are argued, as unnecessary and as affected by conclusions of law; otherwise, factually accepted and incorporated.
55.-62. Accepted and incorporated to the extent necessary.
63. Accepted and incorporated along with additional findings.
HRS' and Intervenor's Proposed Findings of Fact.
1.-5. Accepted and incorporated to the extent necessary.
6. Accepted but subordinate and unnecessary.
7.-8. Accepted and incorporated. However, 8 may be misleading to the extent it suggests that Medicaid reimbursement creates a net financial incentive to provide Medicaid services, and it has been clarified in Finding 54.
9. Accepted as a maximum capacity, not an optimal capacity, especially when the facility is shared with other special procedures.
10.-18. Accepted as an accurate summary of the witness' testimony but subordinate to facts found and/or to facts contrary to those found.
Subordinate and unnecessary.
Accepted but unnecessary.
First four sentences accepted and incorporated; next three sentences rejected as contrary to stipulation of the parties and not proved that increased cost per patient would result; second to last sentence rejected as conclusion of law; and last sentence accepted and incorporated.
Rejected as contrary to facts found.
23.-28. Accepted and incorporated to the extent necessary.
First three sentences rejected as not proved; fourth sentence accepted and incorporated; last sentence accepted but irrelevant.
Subordinate.
31.-33. Accepted and incorporated.
34. Rejected because 2080 is maximum capacity and optimal capacity is 1040, especially sharing space with other special procedures; modified and incorporated.
35.-36. Accepted and incorporated.
Accepted but cumulative.
Accepted and incorporated.
Subordinate and unnecessary.
Accepted but unnecessary.
Accepted but subordinate and unnecessary.
Rejected as contrary to facts found (although less certainty and precision is possible without referral data.)
Accepted but subordinate to facts found and unnecessary.
44.[sic] Accepted and subordinate to facts found.
COPIES FURNISHED:
E. G. Boone, Esquire
Robert T. Klingbeil, Jr., Esquire Jill A. Conti, Esquire
P. O. Box 1596 Venice, FL 34284
R. Bruce McKibben, Esquire Paul B. Smith, Esquire Department of Health and Rehabilitative Services 1323 Winewood Blvd. Building One, Room 407 Tallahassee, FL 32399-0700
William B. Wiley, Esquire
P. O. Box 2174 Tallahassee, FL 32316-2174
Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Blvd.
Tallahassee, FL 32316-2174
Gregory L. Coler Secretary
Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, FL 32399-0700
John Miller, Acting General Counsel Department of Health and Rehabilitative Services
1323 Winewood Boulevard Building One, Room 407 Tallahassee, FL 32399-070
| Issue Date | Proceedings |
|---|---|
| Apr. 06, 1987 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Jun. 24, 1987 | Agency Final Order | |
| Apr. 06, 1987 | Recommended Order | Excess of cardiac catheter labs in district. No "not normal""circumstances; geographic or financial lack of access 600 procedure standard overpredicts number |
