STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ST. JOSEPH HOSPITAL OF PORT ) CHARLOTTE, FLORIDA, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 89-1258

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

and )

) ADVENTIST HEALTH SYSTEMS/SUNBELT, ) d/b/a MEDICAL CENTER HOSPITAL, )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Don W. Davis, held a formal hearing in the above- styled case on May 8, 1989, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Joseph R. Buchanan, Esquire

Suite 900, Sun Bank Building 777 Brickell Avenue

Miami, Florida 33131

For Respondent: Edgar Lee Elzie, Jr., Esquire

215 South Monroe Street, Suite 804 Tallahassee, Florida 32301

For Intervenor: E. G. Boone, Esquire

1001 Avenida del Circo Venice, Florida 34284

STATEMENT OF THE ISSUES

The issue for determination is whether Petitioner should be awarded a certificate of need authorizing the establishment of cardiac catheterization laboratory services at its facility in Port Charlotte, Florida. As a result of stipulations of the parties presented at hearing, matters for consideration were limited to whether Petitioner meets the criteria of availability of funds for capital expenditures for the project in accordance with Section 381.705(1)(h), Florida Statutes; and whether Petitioner has shown the existence of need for additional services by any existing medically underserved groups in the service area.

PRELIMINARY STATEMENT

On February 23, 1989, Petitioner requested a formal administrative hearing to contest the denial of its application for a Certificate of Need to establish cardiac catheterization services. Thereafter the matter was transferred to the Division Of Administrative Hearings to conduct a formal hearing pursuant to Section 120.57(1), Florida Statutes.

On March 27, 1989, Intervenor, whose facility is located in Port Charlotte, Florida, filed a petition to intervene in the proceeding which was granted due to Intervenor's status as a present provider of cardiac catheterization services in the geographical service area covered by Petitioner's application.

Subsequently, Fawcett Memorial Hospital, also located in Port Charlotte, Florida, filed a petition to intervene which was denied during the consideration of preliminary matters at the finalhearing since that hospital was not an applicant in the same batching cycle as Petitioner, a requirement for intervention pursuant to Section 381.709(5)(b), Florida Statutes. Further, while the hospital has been granted a Certificate of Need to establish a cardiac catheterization laboratory in the future, the nonexistence of such a program at present precludes the hospital's classification as an existing provider.

On May 4, 1989, Respondent's motion to strike portions of the Petition for Formal Administrative Hearing was granted. The stricken portions of the petition were those which sought a comparative review of Petitioner's application with that of Cape Coral Medical Center, located in Cape Coral, Florida, and that of Fawcett Memorial Hospital. Neither of these hospitals was a Certificate of Need applicant in the same batching cycle as Petitioner.

Subsequent to granting Respondent's motion to strike portions of the Petition for Formal Administrative proceedings, Petitioner's motion to continue formal proceedings for an indeterminate period of time pending completion of appellate court proceedings in other cases was denied. Also, Petitioner's later motion to relinquish jurisdiction to the Department of Health and Rehabilitative Services, which motion was opposed by Respondent, was denied in view of the parties' inability to stipulate to the nonexistence of disputed material facts.

At the hearing, Petitioner presented the testimony of three witnesses and five evidentiary exhibits. Petitioner'sexhibit number five was not accepted in evidence. Respondent presented the testimony of one witness. Intervenor presented evidence in the form of a proffer of testimony which, but for the parties' stipulation to admission by the proffer, would otherwise have been presented by two witnesses; a cardiologist and a hospital representative.

Further, Intervenor presented two evidentiary exhibits.

The transcript of the hearing was filed with the Division Of Administrative Hearings on May 30, 1989. Proposed findings of fact were submitted by the parties and are addressed in the appendix to this recommended order.

Facts established in paragraphs 1 through 6 were the subject of stipulation between the parties.

FINDINGS OF FACT

1. The parties have stipulated that Petitioner does not meet the criteria of Section 381.705(1)(a), Florida Statutes, because there is no numeric need for

   the program established by any agency rule formula and that no emergency or other not normal circumstances exist, including problems of geographic, financial or programmatic access, justifying the program in the absence of such enumerated need. Petitioner's agreement to this stipulation was conditioned upon an assumption that previous Certificates of Need, formerly granted by final orders of Respondent to other entities in previous batching cycles and now the subject of legal appeals by Petitioner in the appellate court, will eventually be confirmed by that court to have been properly issued.

   
   

2. The parties have stipulated that Petitioner, as the result of nonexistence of numeric or nonnumeric need, has not met criteria regarding its ability to provide quality care, a requirement of subparagraph (c) of Section 381.705(1), Florida Statutes; has not met criteria regarding availability and adequacy of other health care facilities in the applicant's service district, a review component set forth in Section 381.705(1)(d), Florida Statutes; has not met criteria regarding immediate and long term financial feasibility of Petitioner's proposal, a requirement of Section 381.705(1)(i), Florida Statutes; has not met criteria regarding the impact of the proposed project on the costs of providing such health services, a requirement of Section 381.705(1)(l), Florida Statutes; and has not met criteria, as required by Section

   381.705(2)(a)-(d), Florida Statutes, regarding alternative services, efficiency of existing services, alternatives to new construction or the likelihood of patients obtaining the proposed service in the absence of Petitioner's proposal.

   
   

3. The parties have stipulated that review requirements of subparagraphs (e), (f), (g), (j), and (k) of Section 381.705(1), Florida Statutes, are found not to be applicable to this proceeding. Those subparagraphs relate, respectively, to economics of shared services, need for special services, need for research and educational facilities, special needs of health maintenance organizations and needs of entities serving residents outside the service area.

   
   

4. The parties have stipulated that the criteria ofSection 381.705(1)(b), Florida Statutes, has not been met because they were not addressed or challenged by Petitioner. However, Petitioner does contest the accessibility by medically underserved groups of existing and approved providers in the service district.

   
   

5. With the exception of the availability of funds for capital and operating expenditures related to the project in Petitioner's application and the extent to which the proposed services will be accessible to all residents of the service district, further stipulation between the parties also establishes that the review criteria contained in Section 381.705(1)(h), Florida Statutes, does not apply to this proceeding. Portions of Rule 10-5.011(b), Florida Administrative Code, relating to accessibility of services to residents of the service district are also excepted from consideration in this proceeding by the parties' stipulation.

   
   

6. By stipulation of the parties, it is established that the review requirement of Section 381.705(1)(l), Florida Statutes, relating to the probable impact of the proposed project on the cost of providing services proposed by Petitioner, is met. The parties' stipulation further establishes that requirements of Section 381.705(1)(m) and Section 381.705(1)(n), Florida Statutes, have been met. These statutory subparagraphs relate, respectively, to methods and costs of proposed construction, and Petitioner's past and proposed provision of health care services to medicaid and medically indigent patients.

   
   

7. Petitioner is a separate, albeit subsidiary,corporation from its parent, Bon Secours Health Systems, Inc., (Bon Secours) a "not for profit"

   corporation based in Marriottsville, Maryland. Approximately 80 percent of the total project cost of $1,450,000 cost is expected to come from the parent organization and not Petitioner's corporation. The project has been approved by Petitioner's corporation and management approval has been granted by Bon Secours, subject only to final board approval and reevaluation by the parent corporation on an annual basis until the actual capital expenditure is incurred. Petitioner's parent corporation uses either a line of credit or goes to the tax exempt bond market to meet capital expenditure needs. The bond market is utilized when capital needs exceed $15 million for the year. Whether the funding source for Petitioner's project would come from a line of credit or bond financing would not be known until the actual year in which the expenditure is incurred.

   
   

8. Bon Secours includes Petitioner in its obligated group which consists of a system-wide master trust indenture established in 1985. The group consists of eight hospitals and three long term care facilities. Weaker entities in the group have the benefit of the credit strength of the group's entire system. In this regard, Bon Secours enjoys a Standard & Poors and Moodys' bond rating of A+ and A-1, respectively. The corporation is a good credit risk with a strong financial position and good earnings record. Over the next five years, Bon Secours has the ability to raise in excess of $100,000,000 in the bond market for funding purposes, inclusive of the project which is the subject of theseproceedings.

   
   

9. Although final approval of Petitioner's project by Bon Secours' board of directors is expected shortly, that approval had not occurred at the time of final hearing. As a result, the proof fails to establish that Bon Secours is committed to provide financing for Petitioner's project.

   
   

10. Petitioner presented expert testimony regarding accessibility by medically underserved groups to Petitioner's and other cardiac catheterization programs. Petitioner's expert placed the size of the medically indigent population, a subcategory of the medically underserved group, at six to seven percent of the total population of the service area. Due to the lack of specificity of the methodology used in arriving at the cited percentage figure, no credibility can be ascribed to that population percentage. However, both Respondent and Petitioner concede the existence of this group in the district service area sought to be served by Petitioner's project.

    
    

11. Petitioner has not established whether the medically indigent population is denied access to cardiac catheterization programs within the district service area. While Petitioner's hospital is a medicaid provider with a proactive policy of aiding the medically indigent, the availability of cardiac catheterization services exist for this group at Intervenor's medical center facilities, located only five miles from Petitioner's hospital.

    
    

12. Intervenor is also a medicaid provider. The proof fails to establish that medicaid patients or medically indigentpatients are presently denied or turned away from Intervenor's facility. Further, the duplication of such services at Petitioner's hospital could effectively reduce the number of cardiac catheterization procedures required for the medical staff of Intervenor's laboratory to maintain proficiency. In point of fact, there is unused cardiac catheterization capacity at Intervenor's facility. As established by Intervenor's exhibit number one, there were 562 cardiac catheterization procedures performed at Intervenor's facility in 1988. The State Health Plan recites a minimum goal of 600 such procedures a year as a proficiency

    measurement; the Local Health Plan maintains that a minimum of 300 procedures should be performed to insure proficiency.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter. Section 120.57(1), Florida Statutes.

    
    

14. Petitioner bears the burden of establishing its entitlement to the Certificate of Need it seeks. Florida Department of Transportation v. J. W. C. Company, Inc., 396 So.2d 778 (Fla. 1st DCA 1981). Specifically, Petitioner must establish its compliance with the criteria of Section 381.705, Florida Statutes, Rule 10-5 of the Florida Administrative Code, and requirements of the State and Local Health Plans. The appropriate weight to be given each criterion will vary, depending upon the facts present in each case. Collier Medical Center, Inc., v.Department of Health and Rehabilitative Services, 462 So.2d 83 (Fla. 1st DCA 1985).

    
    

15. As stipulated by the parties, Petitioner has failed to meet the criteria of subparagraphs (a), (b), (c), (d), and (i) of Section 381.705(1), Florida Statutes; requirements mandating a showing of numeric need or not normal circumstances, adequacy of existing services, ability to provide quality of care, availability of other health care facilities, and financial feasibility of the project.

    
    

16. Also, in accordance with stipulation of the parties, criteria in subparagraphs (e), (f), (g), (j) and (k), of Section 381.705(1), Florida Statutes, were deemed not applicable to this proceeding. Those requirements relate to shared service needs, research and educational facilities, health maintenance organization needs, and service to out of district residents.

    
    

17. As established by stipulation of the parties, Petitioner has met requirements of subparagraphs (l), (m), and (n) of Section 381.705, Florida Statutes, dealing with certain impacts of the proposed project, cost of proposed construction and Petitioner's history of provision of services to medicaid and medically indigent groups.

    
    

18. As a result of no showing of numeric need, Petitioner acknowledges failure to meet criteria set forth in subparagraphs (a)-(d) of Section 381.705(2), Florida Statutes; relating to service and construction alternatives and likelihood of service availability in the absence of Petitioner's proposal. Subparagraph (e) of that statutory section was stipulated to be nonapplicable to these proceedings.

    
    

19. Petitioner has failed to establish that the proposed project has received final authorization from Bon Secours, its parent corporation and the potential provider of capital funds for the project. As a result, Petitioner has not satisfied the requirement of Section 381.705(1)(h), relating to availability of resources or funds for capital operating expenditures of the project.

    
    

20. While the existence of a medically indigent group is established by the testimony of witnesses for Petitioner and Respondent, the lack of access by that group to cardiac catheterization services has not been proven as required by subparagraph (h) of Section 381.705(1), Florida Statutes, and Rule 10- 5.011(1)(b), Florida Administrative Code.

21. It is concluded that Petitioner's proposal fails to meet the requisite criteria of Sections 381.705(1) and (2), Florida Statutes, as well as Rule 10- 5.011(1)(b), Florida Administrative Code. Balanced consideration of the statutory and rule criteria leads to the conclusion that Petitioner's application should be denied. In view of Petitioner's failure to meet other criteria unrelated to a showing of need, this conclusion is applicable regardless of whether numeric or other need for the proposed cardiac catheterization laboratory exists.

RECOMMENDATION

Based on the foregoing, it is hereby

RECOMMENDED that a Final Order be entered denying Petitioner's application for approval of a cardiac catheterization Certificate of Need.

DONE AND ENTERED this 29th day of June, 1989, in Tallahassee, Leon County, Florida.

DON W.DAVIS

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Fl 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 29th day of June, 1989.

APPENDIX

The following constitutes my specific rulings, in accordance with Section 120.59, Florida Statutes, on findings of fact submitted by the parties.

Petitioner's Proposed Findings.

1.-3. Adopted in substance, except that part (l) of proposed finding 3 was met by Petitioner.

4.-5. Addressed in part. To the extent that the last sentence of proposed finding 5 suggests the establishment of final approval by the parent corporation, it is rejected.

6. Accepted with the exception of approval by the parent corporation. The record supports a finding of approval by management of that corporation, but not the board of directors.

7.-8. Adopted in substance.

1. Adopted in part, remainder rejected due to witness's inability to support her calculations as to percentages of the population within the service district classified as medically indigent.

2. Addressed in part, remainder unnecessary to conclusion.

3. Addressed in part, remainder rejected on basis of relevancy.

4. Addressed.

5. Rejected on basis of relevancy.

6. Addressed in part, remainder rejected as argumentative and speculative.

Respondent's Proposed Findings.

1.-2. Rejected. Treated in preliminary discussion. 3.-21. Adopted in substance.

22.-23. Adopted by reference. 24.-25. Addressed in substance. 26.-30. Adopted by reference.

31.-33. Adopted by reference.

Intervenor's Proposed Findings.

1.-3. Adopted in substance.

4. Rejected as unnecessary. 5.-9. Adopted in substance.

10. Adopted by reference.

11.-12. Adopted in substance.

COPIES FURNISHED:

Joseph R. Buchanan, Esq. Suite 900, Sun Bank Building 777 Brickell Avenue

Miami, FL 33131

Edgar Lee Elzie, Jr., Esq.

215 South Monroe Street, Suite 804 Tallahassee, FL 32301

E. G. Boone, Esq.

1001 Avenida del Circo Venice, FL 34284

Gregory L. Coler Secretary

Department of Health and Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, FL 32399-0700

Sam Power Clerk

Department of Health and Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, FL 32399-0700

John Miller, Esq. General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, FL 32399-0700

Docket for Case No: 89-001258

Orders for Case No: 89-001258