STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
HUMANA OF FLORIDA, INC., ) d/b/a HUMANA HOSPITAL LUCERNE, )
)
Petitioner, )
)
vs. ) CASE NO. 89-1279
)
DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, and ) CENTRAL FLORIDA REGIONAL HOSPITAL, ) INC., d/b/a CENTRAL FLORIDA )
REGIONAL HOSPITAL, )
)
Respondents. )
) HUMANA OF FLORIDA, INC., ) d/b/a HUMANA HOSPITAL LUCERNE, )
)
Petitioner, )
)
vs. ) CASE NO. 89-1280
)
DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, and ) WINTER PARK MEMORIAL HOSPITAL ) ASSOCIATION, INC.,. d/b/a WINTER ) PARK MEMORIAL HOSPITAL, )
)
Respondents. )
) FLORIDA HOSPITAL, )
)
Petitioner, )
)
vs. ) CASE NO. 89-1282
)
DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICED and WINTER ) PARK MEMORIAL HOSPITAL ASSOCIATION,) INC., d/b/a WINTER PARK MEMORIAL ) HOSPITAL, )
)
Respondents. )
) FLORIDA HOSPITAL, )
)
Petitioner, )
)
vs. ) CASE NO. 89-1283
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES and ) CENTER FLORIDA REGIONAL HOSPITAL, )
)
Respondents. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Mary Clark, held a formal hearing in the above- styled consolidated cases on June 26-28, July 17-21, August 31, and September 1, 1989, in Tallahassee, Florida; and on June 29 and 30, in Orlando, Florida.
APPEARANCES
For Petitioner: Adventist Health Systems Sunbelt, Inc., d/b/a
Florida Hospital: Jeffery A. Boone, Esquire and
Robert T. Klingbeil, Jr., Esquire
P.O. Box 1596 Venice, FL 34284
For Petitioner, Humana of Florida, Inc., d/b/a
Humana Hospital Lucerne: James C. Hauser, Esquire
P. O. Box 1876 Tallahassee, FL 32302
For Respondent, Depth of Health and Rehabilitative
Services: Richard A. Patterson, Esquire
Ft. Knox Exec. Center 2727 Mahan Drive
Tallahassee, FL 32308
For Respondent, Central
Florida Regional Hospital: John Radey, Esquire
and
Elizabeth McArthur, Esquire
Monroe Park Tower Suite 1000
Tallahassee, FL 32314
For Respondent, Winter Park
Memorial Hospital: Kenneth F. Hoffman, Esquire
2700 Blairstone Road
Tallahassee, FL 32314
STATEMENT OF THE ISSUES
This proceeding concerns applications for certificates of need (CON) for open heart surgery programs at Central Florida Regional Hospital and Winter Park Memorial Hospital. It must be determined whether those applications meet applicable statute and rule criteria and should be approved by the Department of Health and Rehabilitative Services.
By stipulation, filed on June 20, 1989, the parties agree that the following criteria have either been met or are not at issue in this proceeding:
Section 381.705(1)(c), F.S., regarding quality of care, only as to the applicants' record of providing quality of care in currently existing programs, and not as to the provision of open heart services.
Section 381.705(1)(f), F.S., regarding the need for special equipment and services in the district which are not reasonably and economically accessible in adjoining areas.
Section 381.705(1)(j), F.S., regarding the special needs and circumstances of health maintenance organizations.
Section 381.705(2)(e), F.S., regarding nursing home beds.
Rule 10-5.O11(1)(f)3.c., F.A.C., regarding the applicants' ability to provide a specified range of services in the facility if granted their certificates of need.
PRELIMINARY STATEMENT
On or about September 29, 1988, Central Florida Regional Hospital, Inc., and Winter Park Memorial Hospital, Inc., filed applications for certificates of need for open heart surgery programs in Department of Health and Rehabilitative Services District 7. Applications were also filed in the same batch for open heart surgery programs at Wuesthoff Memorial Hospital and at Cape Canaveral Hospital, in Brevard County, District 7.
On January 20, 1989, HRS issued its notice of intent to approve Certificate of Need No. 5695 for Winter Park, Certificate of Need No. 5696 for Central Florida, and Certificate of Need No 5694 for Wuesthoff Memorial Hospital.
Timely petitions challenging the proposed agency action were filed by these existing providers: Florida Hospital, Orlando Regional Medical Center and Humana Hospital Lucerne.
After the cases were referred to the Division of Administrative Hearings and were consolidated for hearing, Orlando Regional Medical Center dismissed its petition. This released the certificate of need for Wuesthoff, as the remaining petitioners had not challenged that approval.
At the commencement of the final hearing, in response to motions to dismiss Florida Hospital as an improper party, that party was granted leave to amend its petition. The petition was amended to proceed under the name, "Adventist Health Systems Sunbelt, Inc., d/b/a Florida Hospital".
On July 20, 1989, Humana Hospital Lucerne moved for a summary recommended order dismissing Winter Park's application for failure to include a "pro forma"
statement with its initial application submission, although the document was included in response to omissions requests from the Department. The motion was held in abeyance to allow Winter Park an opportunity to respond. The motion is now denied for reasons described in the conclusions of law of this recommended order.
At the final hearing, Central Florida Regional Hospital presented the testimony of eleven witnesses and offered twenty- three exhibits, all received in evidence, including depositions of William McInnes and Barbara Farr. (Exhibits #1-10, 13, 15, 16, 19-21, 26, 28, 30, 31, 35-37)
Winter Park Memorial Hospital presented ten witnesses and eighteen exhibits, all received in evidence, including depositions of Charlotte Maynard, Robert Wright, Dr. Meredith Scott, Beverly Wallace, Margo Kelly, Debby Guthrie, and Patricia Dietrich. (Exhibits #1-18)
The Department of Health and Rehabilitative Services presented a single witness and its two exhibits were received in evidence. (Exhibits #1-2)
Florida Hospital presented twelve witnesses and sixteen exhibits, all received in evidence, including a deposition of Harold S. Luft, filed without objection and with leave of the hearing officer on November 6, 1989. (Exhibits #2, 4a-e, 9, 10, 18, 28, 43-48, Luft deposition unnumbered)
Humana Hospital presented the testimony of nine witnesses and offered thirty-seven exhibits, of which thirty-three were received in evidence. (Exhibits #2, 4, 8, 9, 11-14, 16-18, 21, 23, 24, 26-28, 31-33, 35-47) Exhibits
#25, 48, 49 and 50 were rejected as irrelevant.
The transcript of hearing was filed on September 22, 1989, and the parties were granted leave to file their proposed recommended orders on or before October 30, 1989. These proposals have been carefully considered, along with the parties' written closing argument, memoranda, and notices of supplemental authority. Specific rulings on the proposed findings of fact are found in the attached appendix.
FINDINGS OF FACT
The Parties
Applicant, Central Florida Regional Hospital (CFRH) is a 226-bed private, for profit hospital in Sanford, Seminole County Florida. CFRH was a county-owned hospital until 1980, when it was purchased by Central Florida Regional Hospital, Inc., a wholly-owned subsidiary of Hospital Corporation of America (HCA).
CFRH currently provides a wide range of diagnostic and treatment services, including cardiology, neurology surgery, special imaging, and nuclear cardiology. Its in-patient cardiac catheterization services were initiated in April, 1988.
Applicant, Winter Park Memorial Hospital (WPMH), is a 301-bed acute care, not-for-profit hospital located in Winter Park, Orange County, Florida. It was opened in 1955, and is governed by a board of directors comprised of business and civic leaders in the central Florida area.
WPMH also currently offers diagnostic cardiac catheterizations services with medical/surgical, pediatric/obstetric, and a broad range of outpatient services.
The Department of Health and Rehabilitative Services (HRS) is the agency responsible for administering sections 381.701 through 381.715. F.S., the "Health Facility and Services Development Act", the statute describing the certificate of need (CON) process.
Petitioner, Humana of Florida, Inc., is the corporate owner of Humana Hospital Lucerne (Humana), a 267-bed hospital facility in downtown Orlando, Orange County, Florida.
Along with its broad range of existing services, Humana provides open heart surgery and a full range of diagnostic and therapeutic cardiac catheterizations. It maintains two operating rooms (ORs) dedicated for open heart surgery.
Petitioner, Adventist Health Systems/Sunbelt, Inc. is the corporate owner and licensee of a number of hospitals, including Florida Hospital. Florida Hospital is a private not-for-profit tertiary care hospital with over 1100 beds on three campuses in central Florida: Orlando, Apopka, and Altamonte Springs. Florida Hospital's open heart surgery program, the largest in HRS District 7, and one of the largest in the southeast United States, is conducted at the Orlando facility in Orange County. It has four ORs dedicated to open heart surgery.
Florida Hospital has an active cardiac catheterization program with a full range of diagnostic and therapeutic procedures, such as angioplasty and valvuloplasty.
The Applications
CFRH proposes to add its open heart surgery program at a total cost of
$4,322,702.00, including construction costs, equipment and financing costs.
CFRH intends to start with a single furnished OR and with shelled-in space for a second OR. These and a recovery area will be located on the first floor adjacent to the existing surgical department. Twelve existing general medical/surgery beds will be converted to intensive care beds on the second floor, accessible by means of an elevator dedicated to the exclusive use of open heart surgery patients.
CFRH's primary service area is described as north Seminole and southwest Volusia counties, an area containing no other open heart surgery programs. It anticipates it will draw its open heart surgery patients primarily from that service area, and projects 200 surgeries by the end of the first year, with 288 surgeries during the second year.
WPMH proposes to add two dedicated ORs and related operating suite rooms for open heart surgery, at a cost of $1,470,000.00. One of the ORs will be kept available for emergency open heart surgery cases. The application does not include additional intensive care or critical care unit beds. Because it is slowly phasing in additional progressive care beds, the applicant anticipates that the current bottleneck created by patients waiting to leave critical care to go to progressive care, will be relieved by the time the open heart surgery program generates a demand for critical care and intensive care beds.
Like CFRH, WPMH claims a relatively local primary service area, east Orange and south Seminole Counties, and proposes that its open heart surgery program will serve that same area.
WPMH projects a case load of 117 open heart surgery patients the first year, 173 the second year, and is confident that it will meet the minimum requirement of 200 adult open heart procedures annually by the end of the third year of service.
Neither CFRH nor WPMH are projecting pediatric open heart surgery.
Numeric Need and the "350 Standard"
HRS Rule 10-5.011(1)(f)8., Florida Administrative Code, provides the formula for determining a threshold numeric need for open heart surgery programs in a service area, defined for purposes of the rule as the entire HRS district. District 7 is comprised of Orange, Seminole, Osceola, and Brevard Counties, on Florida's east central coast. The formula is stated as follows:
8. Need Determination. The need for open heart surgery programs in a service area shall be determined by computing the projected number
of open heart surgical procedures in the service area. The following formula shall be used in this determination:
Nx - Uc X Px Where:
Nx = Number of open heart procedures projected for Year X;
Uc = 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;
Px = Projected population in the service area in Year X; and,
Year X = The year in which the proposed open heart surgery program
would initiate service, but not more than two years into the future.
Elizabeth Dudek is a health facilities and services consultant supervisor in HRS' Office of Regulation and Health Facilities. She was the Department's authorized representative at the hearing and was qualified, without objection, as an expert in health planning.
The State Agency Action Report (SAAR), reflecting HRS' review of the CON proposals, applies the formula above as explained by Ms. Dudek.
The planning horizon for the project under consideration is July, 1990, which, based on data from the Executive Office of the Governor, has a projected population of 1,492,327. The use rate of 202.53 per hundred thousand population for District 7 was derived from volume data provided by the local health council and from population data from the Executive Office of the Governor.
The result of the formula is a projected number of 3022 procedures in the planning horizon.
While the rule does not specify what is done with this figure, HRS looks to the 350 minimum number of procedures required in subsection 11. of the rule and divides 350 into the projected number of procedures, to derive a theoretical number of programs which could operate in the district.
HRS found a need for 8.6 programs, rounded to 9. Since District 7 has four existing programs, this meant that 5 additional programs could be approved. HRS approved three, the two applicant parties in this proceedings and Wuesthoff, in central Brevard County.
There is little, if any, dispute with HRS' application of its rule to this point.
The parties do vigorously dispute the application of the following portions of Rule 10-5.011(1)(f), F.A.C.:
11.a. There shall be no additional open heart surgery programs established unless:
the service volume of each existing and approved open heart surgery program within
the service area is operating at and is expected to continue to operate at a minimum of 350 adult open heart surgery cases per year or 130 pediatric heart cases per year, and,
the conditions specified in Sub- subparagraph 5.6., above, will be met by the proposed program.
b. No additional open heart surgery programs shall be approved which would reduce the volume of existing open heart surgery facilities below 350 open heart procedures annually for adults and 130 pediatric heart procedures annually, 75 of which are open heart.
The volume of procedures performed at existing programs during the period, July 1987 to June 1988, was:
Florida Hospital-Orlando | 1612 |
Holmes Regional | 333 |
Humana Lucerne | 440 |
Orlando Regional | 368 |
2753 |
At the time of this batching cycle, there were only "existing" and no "approved" (not yet operating) programs in District 7.
Holmes Regional did not meet the 350 minimum, as reflected above.
HRS, however, has consistently and over a period of years, interpreted the requirement of 11.a (I) to be that an average of 350 cases be performed by existing and approved programs, not that each program actually perform that minimum, annually.
Under this interpretation, which assumes that all programs have equal capacity, there are sufficient procedures being generated in the district to allow for the existing programs to average over 688 procedures.
Quality of Care
Part of the rationale for the 350 minimum procedures per year is the widely-accepted view that mortality rates are lower when an open heart program experiences volume at a minimum level of 200-350 procedures annually.
Dr. Harold Luft is a professor of Health Economics employed at the University of California in San Francisco, who has conducted extensive research into the correlation between volume of open heart surgery cases and quality of care. In his findings published in the Journal of the American Medical Association in 1987, in-house deaths were 5.2%, 3.9%, 4.1% and 3.1% in facilities conducting 20-100, 101-200, 201-350, and more than 350 annual operations, respectively. A strong correlation was also found between volume and "poor outcome", defined as patients who either died in the hospital or who stayed beyond 15 days in the hospital (the 90th percentile post operative length of stay). Poor outcomes occurred in 21.7%, 15.5%, 11.8% and 12% of the patients in facilities performing 20-100, 101-200, 201- 350, and more than 350 annual procedures, respectively. The correlations are even more dramatic for patients who received non-scheduled ("emergency") surgery, ranging from 7.7% deaths in hospitals performing less than 100 operations, to 4.6% deaths in hospitals performing more than 350 operations annually, and from 27.9% poor outcomes in the lowest volume hospitals to 16.3% poor outcomes in the highest volume hospital.
Both applicants argue the advantages of having the open heart surgery in-house to avoid the trauma of transfer of an emergency patient from their facility to another existing open heart surgery program. Dr. Luft's study cited above suggests that, despite the trauma of transfer, an unscheduled case might still expect a better outcome in a higher volume facility.
While it is sometimes necessary to transfer a patient from one hospital to another for coronary angioplasty or open heart surgery, those patients are most frequently medically stable and have been scheduled for the procedure. Where a patient in need of a diagnostic cardiac catheterization has a history placing him in a high risk category, the patient will generally be referred at the outset to a facility with full service back-up to avoid the chance of an emergency transfer. Emergency cases are rare in open heart surgery, and when they have occurred, they have been accommodated at existing programs, with little, if any, delay.
The applicants presented ample hypothetical examples of elderly heart patients anxiously enduring emergency transfers by helicopter or ambulance with
dangling IV tubes, balloon pumps or other support devices. No actual data was presented as to how many cases are transferred in this manner or to the mortality rates attributable to such transfers.
Florida Hospital enjoys an excellent reputation for the quality of its large open heart surgery program. It regularly draws patients from areas beyond the boundaries of district 7. No evidence was produced to suggest that the other existing programs are of questionable quality.
Quality of care in the district will not be enhanced by approval of these applications.
Access: Geographic and Economic
Rule 10-5.011(1)(f)4.a., F.A.C. requires that open heart surgery be available within a maximum automobile travel time of two hours under average travel conditions for at least 90% of a service area's population.
It is uncontroverted that this standard is met by existing providers.
The average driving time from Florida Hospital to CFRH is 29 minutes, and from Florida Hospital to WPMH is just over 15 minutes. Although CFRH would be the only program in Seminole County, the population is concentrated at the lower end of the county, closer to Orlando and closer to Florida Hospital than to CFRH at the northeast end of the county.
It would undoubtedly be convenient for patients and their physicians to be able to administer and receive all medical services in a neighborhood center, but no one is suggesting that every community hospital should have an open heart surgery program.
Open heart surgery and its associated services are expensive. These services are not used by many indigent or Medicaid patients and no data is available regarding the level of need by this group or the impediments to access.
WPMH has a reputation of providing low cost medical services and CFRH has a commendable history of commitment to public health, but the numbers of medicaid patients and indigents proposed to be served do not alone-weigh in favor of approval of their applications.
Availability of Staff
A single seven-physician, open heart surgery group performs virtually all of the open heart surgery in District 7, at Orlando Regional Medical Center (ORMC), Humana and Florida Hospital. The group has also committed to providing services at Winter Haven Hospital, an applicant in District 6; Wuesthoff; and CFRH and WPMH.
In addition to surgery, the group provides in-house back up to facilities performing coronary angioplasty in their catheterization labs.
When new programs come on line the open heart surgeon must spend substantial time training and working with the new surgery team at the hospital. This would further strain a busy practice.
There are already delays at existing facilities in obtaining back-up surgery coverage. The group has stated that it will expand, if the new programs are approved, but it is unreasonable to assume that the expansion will be timed to fully accommodate existing demand and the demand of three new programs.
The shortage of critical care unit nurses nationwide and in central Florida, is widely acknowledged, and Dr. Meredith Scott, an eminent cardiac surgeon otherwise enthusiastically supporting the new programs, cautions that the dilution of a pool of highly qualified nurses detracts from his support.
When hospitals are unable to recruit sufficient nursing staff they are left with reliance on temporary agency personnel, a less preferable alternative in terms of costs and quality of care.
Financial Feasibility
Both applicants have the funds required for capital expenditures and start-up costs.
CFRH's parent corporation, HCA, has committed that it will fund the project costs and has the resources to do so. The interest expenses allocated by HCA are appropriately included in the applicant's pro forma projection of revenue and expenses.
The pro formas of both applicants, reflecting no more than a best guess, are reasonable. To the extent that expenses are understated, the charges will no doubt be adjusted, and they will also rise in the event that use rates do not reach expectations. Open heart surgery is a highly profitable health care service.
Competition/Need/Impact on Existing Programs
District 7 has four existing providers and a fifth approved provider, Wuesthoff, for a total of 11 dedicated ORs for open heart surgery, ranging from
4 at Florida Hospital to one at Holmes. Competition in the market already actively exists and was not a notable factor in HRS' decision to approve the applications. Wuesthoff's projected average charge for the first year at
$30,400.00 is $4-5,000.00 less than that projected by WPMH and CFRH.
A single OR has a capacity of 500 cases per year. HRS Rule 1O- 5.O11(1)(f)3.d, F.A.C. requires that each open heart surgery program be able to provide 500 operations per year. Same programs, as Holmes, and as CFRH's proposed program, have only one OR, evidencing acceptance of that capacity principle.
Eleven existing and approved ORs translate into a capacity of 5500 cases.
The horizon year volume is projected at a mere 3,022 cases. Assuming, for argument's sake, and as proposed by the applicants, that the need methodology of Rule 10- 5.O11(1)(f)8., F.A.C. under-states utilization rates and, therefore, need; or that the number of "cases" should be more properly adjusted by a multiplier to derive the number of "procedures"; ample capacity still exists.
In the period of July 1987 through June 1988, existing providers performed 2753 surgeries. The projected 3,022 cases will generate 269 additional surgeries - enough to support Wuesthoff, the approved provider, (assuming no increase by existing providers) - but inadequate to justify the approval of two additional programs in the same cycle.
It is obvious from the above that the applicants, in order to achieve their projected utilizations, will draw heavily from existing providers.
At 1589 cases in 1988, (more than half the cases performed that year in District 7), Florida Hospital is a leviathan, a mega-center. Approximately half of its patients come from counties outside of District 7. Among the in- district patients, substantial numbers of referrals are from CFRH and WPMH. In a 13-month period ending in April 1989, CFRH referred 82 open heart surgery cases to Florida Hospital and one case to Humana. In 1987 and 1988, WPMH referred 70 and 84 open heart surgery patients, respectively, to Florida Hospital and 4 and 5 patients to Humana Hospital.
Whether population growth or increased utilization rates will make up those losses is a matter of conjecture. Utilization rates have remained relatively stable since 1983, gaining 13 cases per thousand in that period, from 196 in 1983, to 209 in 1988.
New technology is making it possible to avoid open heart surgery by removing obstructions from the heart vessel, rather than bypassing them. Ultrasound and laser techniques are being tested, and drug treatments and more efficient use of balloon angioplasty are reducing the incident of by-pass operations.
Consequently, it is the sicker patients who receive the more invasive open heart surgery.
And, typically, the sicker patients are referred to the larger, longer- established programs, driving up their costs when the new programs are able to skim the more profitable cases.
Size alone does not cushion the impact on a facility such as Florida Hospital. The cardiology program accounts for one-third of its revenue. It helps support a research center and extensive education programs . Loss of revenue will effect these programs, as they, rather than direct services to patients, will be cut to the detriment of the health care community at large.
Impact on Humana and the other smaller facilities is likely to be more direct. Humana's open heart surgery program was set back recently when a group of cardiologists left its staff in a dispute over administration. Volume has dropped and Humana reasonably projects 250 surgeries or less in 1991 and 1992 if WPMH and CFRH are approved.
Both Humana and ORMC lost volume and market share when Holmes began to operate, since these facilities rely heavily on in-district patients.
Like Florida Hospital, Humana derives one-third of its revenue from its cardiology program.
State and Local Health Plans
Both applications are consistent with the State Health Plan's objective of maintaining an average of procedures per open heart surgery program in the district, although as demonstrated above, actual maintenance of such an average would decimate the program at Florida Hospital.
The plan's primary goal of ensuring the availability and accessibility of open heart services is not advanced by these applications.
The most current State Plan is dated 1985-87; it is effective through 1987.
Although widely referred to in CON proceedings because of statutory and rule requirements for consistency, the utility of an out-of-date plan for health planning purposes is questionable.
The District 7 local health plan, approved by the local health council in June 1988, is internally inconsistent. It provides:
District VII existing open heart programs appear to be performing well both from the standpoint of volume efficiency and quality, and clearly, there is sufficient, accessible capacity in these programs to handle additional growth. Consider, too, that new open heart programs are being developed in surrounding districts, and these programs, once operational, will begin to draw back their local patient bases from this district's open heart providers. Lately, as angioplasty, laser and drug technology evolve, there is little doubt that the percentage of patients requiring open heart surgery to correct blockage problems will drop. In view of these aforementioned facts, the approval of any additional open heart programs in District VII is discouraged. (Florida Hospital Exhibit #9, P. AC- 45.) emphasis added.
At the same time, the plan provides four recommendations for tertiary services, including open heart surgery: specifically, that priority be given to CON applications from teaching hospitals or regional health care centers (defined as non-teaching hospitals) of at least 300 acute-care beds, that priority be given to applicants which commit to serve patients regardless of ability to pay, that applications be reviewed on a districtwide or regional basis, and that review priority be given to open heart surgery applicants which provide clear documentation of the impact of their proposal on other similar service providers in the district and in adjourning districts serving the same geographical area. (Florida Hospital Exhibit #9, P. 11-67)
As discussed above, these recommendations are only marginally met by the applicants, if at all, and CFRH is clearly not a regional health center.
"Balancing the Criteria" and Summary of Findings
Additional open heart surgery programs are not needed in District 7. The expenditure of approximately $5.8 million in construction and start-up costs, the dilution of scarce staffing resources, the real potential that existing programs will suffer substantial financial losses, the real risk that declining volume at existing programs will lead to poorer quality of care or that the new programs will fail to achieve their hoped for volume, are not outweighed by enhanced convenience to patients, their families and physicians.
Access to good quality open heart surgery is not currently a problem and, as advocated by Dr. Ron Luke, the more prudent health planning course would be to wait to see what happens in the district with the additional two open heart surgery operating rooms at Wuesthoff.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter in these proceedings pursuant to section 120.57(1),
F.S. and section 381.709(5), F.S.
Section 381.709(5)(b), F.S. provides, in pertinent part, that existing health care facilities may
initiate or intervene in [an) administrative
hearing upon a showing that an established program will be substantially affected by the issuance of a certificate of need to a competing proposed facility or program within the same district...
Both Petitioners, Florida Hospital and Humana, proved their standing in this proceeding. The approval of the additional open heart surgery programs will substantially impact the existing providers' ability to recruit and maintain qualified staff and, if projected use rates are achieved, the new programs will substantially reduce existing volume.
The applicants have the burden to establish, by competent substantial evidence, their entitlement to their respective certificates of need. Florida Department of Transportation v. J. W. C., Inc., 396 So.2d 778 (Fla. 1st DCA 1981). Specifically, they must meet the criteria set forth in section 381.705,
F.S. and Rule 10-5.01l(1)(f), F.A.C., based on a balanced consideration of all criteria contained therein. NME Hospitals, Inc., v. Department of Health and Rehabilitative Services, 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).
That balanced consideration leads to the conclusion that the applications of CFRH and WPMH should be denied.
Numerical need, based HRS' formula, is a threshold consideration and does not solely determine the outcome of appropriate review. Humana, Inc., v. Department of Health and Rehabilitative Services, 469 So. 2d 889 (Fla. 1st DCA 1985).
The open heart surgery need methodology in rule 10- 5.011(1)(f)8., F.A.C. is incomplete. That is, the number of programs needed in a given horizon year is derived by HRS' non- rule policy of averaging 350 cases per year per program and dividing the number of projected procedures by 350.
Manipulation of the language of the rule is also needed to apply the provision of 10-5.011(1)(f) 11. a, F.A.C. Paragraph (I) of that rule makes no sense on its face, as it requires that service volume for each existing and approved program operate at a minimum of 350 cases per year. "Approved" programs are not operating at all, or they would be considered "existing".
Thus, HRS "averages" the 350 requirement and ignores the plain meaning of the word, "each", even though its companion rule governing cardiac catheterization laboratories properly describes the averaging process. See Rule 10-5.01(1)(e) 15.a. (I), F.A.C.
The method by which HRS applies its open heart surgery need formula is a rule which has been declared invalid for failure to adopt pursuant to section 120.54, F.S. Lakeland Region Medical Center et al v. Department of Health and Rehabilitative Services, DOAH case #89-2157R, final order filed 11/15/89.
The above case did not, however, foreclose the opportunity for the agency to explicate its policy on a case by case basis, per McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977)
Although HRS has consistently applied its averaging method to the open heart surgery rule and has rejected an attack on that process in St. Joseph's Hospital v. DHRS, DOAH case no. 88-4364 (final order filed 6/23/89), the agency has failed to explain how its method makes sense in the instant proceeding. Here, there are four existing programs with volumes (during the relevant period) ranging from a low of 333 procedures at Holmes Regional, to a high of 1,612 procedures at Florida Hospital. Even though the projected number of new procedures available is only 269, HRS' application of its rule results in the need for five new programs. The 269 projection is reduced to 252 if it is presumed that Holmes would reach its 350 level, as it, in fact, has.
Assuming nevertheless that HRS' averaging policy is appropriate in this case, there are overriding reasons to deny these two applications.
Their need has not been demonstrated. As found above, most of the criteria of section 381.705, F.S. and Rule 10- 5.011(1)(f), F.A.C. have not been met.
If the programs were to achieve their projected volumes, it would be at the substantial detriment of existing programs and of the quality of open heart surgery care in the district.
On balance, the situation in District 7 is similar to that in -District 8, where recently HRS, after formal hearings adopted a recommended order of denial of an additional open heart surgery program, even where it had initially approved the application and its need formula suggested numeric need. Sarasota County Public Hospital Board, d/b/a Memorial Hospital vs. HRS, DOAH cases #89- 1412, 89-1413, final order filed 11/21/89.
The Motion for Summary Recommended Order
In its motion for summary recommended order, Humana argues that WPMH's application should be rejected as a matter of law for failure to include a pro forma with its original submission, although the document was filed in response to omissions requests from the department.
In Inverness Health Care v. Department of Health and Rehabilitative Services, DOAH case #89-3277R (final order filed 8/14/89) Hearing Officer William F. Quattlebaum, invalidated the portions of Rule 10-5.008(1)(d), F.A.C. which allowed the Department to reject, without an opportunity to correct, applications omitting minimum requirements. Both section 120.60(2), F.S. and section 381.709(3)(a), F.S. contemplate that an applicant be given a chance to correct errors or supply omissions. The position advanced by Humana has thus been specifically rejected. Inverness, supra, has not been appealed.
The motion for summary recommended order is denied.
Based on the foregoing, it is hereby, RECOMMENDED:
That a final order be issued denying CON number 5695 for Winter Park Memorial Hospital and number 5696 for Central Florida Regional Hospital.
DONE AND RECOMMENDED this 12th day of December, 1989, in Tallahassee, Leon County, Florida.
MARY CLARK
Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 12th day of December, 1989.
APPENDIX
The following constitute rulings on the findings of fact proposed by each party: CENTRAL FLORIDA REGIONAL HOSPITAL
This party's proposal includes 68 separately numbered lengthy paragraphs combining argument with multiple findings. The arguments are well articulated and well organized. However, the format makes it impossible to accord a paragraph by paragraph ruling. The description of the parties, the description of HRS' application of its rule and the conclusions regarding financial feasibility of the CFRH application are accepted generally and substantially, or in summary form, have been adopted in this recommended order. Otherwise, the findings are rejected as unnecessary, immaterial or contrary to the weight of evidence.
WINTER PARK MEMORIAL HOSPITAL
Adopted in paragraph 2.
Addressed in the Preliminary Statement.
Adopted in paragraph 2.
4-6. Rejected as unnecessary.
7. Adopted in Statement of the Issues. 8-10. Rejected as unnecessary.
Adopted in paragraph 9.
Rejected as unnecessary.
13-17. Adopted generally in paragraph 9.
18 and 19. Rejected as unnecessary.
20-31. The current staffing at the facility and the level of staffing projected as necessary for the open heart program are not materially at issue. The issue is whether necessary staffing will be available and whether competition for existing staff will impact costs and quality of care.
Rejected as contrary to the weight of evidence.
See 20-31, above.
Rejected as contrary to the evidence. There are delays in getting back-up surgery teams.
The description of the group and its commitment is adopted in paragraph 30. That quality of care will not be affected was not established by the weight of evidence.
36-38. Rejected as unnecessary.
39-47. Adopted generally in paragraphs 34 and 35, except as to the finding that there is sufficient growth to assure 200 cases in the third year for all three applicants. This is rejected as contrary to the evidence.
48 and 49. Rejected as unnecessary.
50. Rejected as contrary to the weight of evidence.
51-53. Addressed in paragraph 23, otherwise rejected as immaterial. 54-58. Addressed in paragraph 28, otherwise rejected as immaterial.
Adopted in substance in paragraph 29.
Adopted in paragraph 14.
61 and 62. Adopted in paragraph 12.
63. Adopted in paragraph 14.
64 and 65. Rejected as unnecessary.
66. Adopted in paragraphs 16 and 17, except that the application meets the requirements of the rules, only as applied by HRS.
67-83. Rejected generally as contrary to the weight of evidence or immaterial.
84. Rejected as argument.
85-89. Rejected as immaterial or argument.
90. The comparison of Florida Hospital's mortality rate to that of Ormand Beach Hospital's is immaterial. There is no analysis of case mix and even Dr. Luft concedes that there may be isolated examples of high mortality rates with high volume or low rates in a low volume hospital.
91-93. Rejected as unnecessary or unsupported by the weight of evidence.
Rejected as unnecessary.
That the application meets the objectives of the local health plan is rejected as contrary to the evidence. The remaining portion of the paragraph is subordinate
Rejected as unnecessary.
Adopted in cart in paragraph 44, otherwise rejected as contrary to the evidence.
Rejected as cumulative and unnecessary. 99-115. Rejected as unnecessary.
That competition already exists is adopted in paragraph 36 otherwise rejected as unnecessary.
Rejected as contrary to the evidence.
THE DEPARTMENT OF HRS
1-3. Addressed in Preliminary Statement.
4 and 5. Adopted in substance in paragraph 12. 6-8. Adopted in paragraph 14.
9. Adopted in paragraph 45.
10 and 11. Rejected as unnecessary.
Rejected as contrary to the weight of evidence.
Adopted, as to the "averaging" method, in paragraph 44, otherwise rejected as unnecessary.
Rejected as contrary to the weight of evidence, except as to the finding regarding drive time, which is adopted in paragraph 26.
The quality of care stipulation is addressed in the statement of issues. The remaining finding regarding 200 procedures within 3 years is rejected as contrary to the weight of evidence.
16 and 17. Adopted, as to financial feasibility, in paragraphs 34 and 35, otherwise rejected as contrary to the weight of evidence.
18. Rejected as contrary to the weight of evidence.
19 and 20. Rejected as immaterial or unnecessary.
HUMANA OF FLORIDA, INC.
Adopted in substance in paragraph 9.
Rejected as unnecessary. The original lack of pro forma is addressed in conclusions of law.
Rejected as unnecessary.
Adopted in paragraphs 6 & 7.
5 and 6. Adopted in Preliminary Statement.
Adopted in paragraphs 14 & 16.
Rejected as unnecessary.
Adopted in Preliminary Statement. 10-12. Adopted in paragraph 4.
Rejected as unnecessary.
Rejected as subordinate.
Adopted in substance in paragraph 30.
16 and 17. Adopted in paragraph 46.
Adopted in paragraph 15.
Adopted in paragraph 19.
20 and 21. Rejected as unnecessary.
22. Adopted in paragraph 14 and in conclusions of law. 23-25. Rejected as unnecessary.
26 and 27. Adopted in paragraph 38.
Adopted in paragraph 37.
Adopted in substance in paragraph 46.
30 and 31. Adopted in substance in paragraphs 26 and 27. 32-35. Rejected as unnecessary.
36. Adopted in substance in paragraph 41.
37 and 38. Rejected as unnecessary.
39 and 40. Adopted in paragraph 46.
41-44. Rejected as cumulative and unnecessary.
45-49. Adopted in substance in paragraphs 44 and 45.
50 -60. Rejected as contrary to the weight of evidence or unnecessary. 61-63. Adopted in substance in paragraph 36.
64-70. Rejected as cumulative or unnecessary.
71. Adopted in paragraph 24.
72 and 73. Adopted in paragraph 25.
74. Adopted in paragraph 19.
75-77. Rejected as unnecessary.
78-82. Adopted in substance in paragraphs 30-32.
83 and 84. Adopted in paragraph 33.
85-90. Rejected as unnecessary, except as adopted in paragraph 22. 91-1OO. Rejected as unnecessary.
Adopted in paragraph 29.
Rejected as unnecessary.
109-123. Rejected as contrary to the weight of evidence. 124-125. Rejected as unnecessary.
126-134. Adopted in summary in paragraph 43.
135-138. Rejected as cumulative.
139-143. Rejected as contrary, to the weight of evidence or unnecessary. FLORIDA HOSPITAL
Adopted in paragraphs 1 & 2.
Adopted in paragraph 4.
Adopted in paragraph 5.
Adopted in paragraph 16.
5-12. Rejected as unnecessary.
Adopted in paragraph 12.
Adopted in paragraph 14.
Addressed in Preliminary Statement.
Adopted in paragraph 17.
Adopted in paragraph 38.
Rejected as unnecessary.
Adopted in paragraph 41.
20 and 21. Rejected as unnecessary.
22 and 23. Adopted in paragraph 45.
Rejected as unnecessary.
Adopted in paragraph 19.
Adopted in paragraph 20.
Rejected as cumulative and unnecessary.
Adopted in paragraph 26.
Adopted in paragraph 27.
Adopted in paragraph 22.
31 and 33. Rejected as unnecessary.
34-39. Rejected as argument or unsupported by the record.
40. Adopted in summary in paragraph 33.
41 -46. Rejected as unnecessary.
Rejected as immaterial.
Rejected as contrary to the evidence or immaterial.
Addressed in Conclusions of Law.
Adopted in paragraph 39.
51-57. Rejected as unnecessary.
58-76. Impact is addressed in summary in paragraphs 42 and 43. 77. Adopted in paragraph 30.
Adopted in paragraph 29.
Rejected as unnecessary.
COPIES FURNISHED:
Jeffery A. Boone, Esquire
Robert T. Klingbeil, Jr., Esquire
P.O. Box 1596 Venice, FL 34284
James C. Hauser, Esquire
P.O. Box 1876 Tallahassee, FL 32302
Richard A. Patterson, Esquire Ft. Knox Executive Center 2727 Mahan Drive
Tallahassee, FL 32308
John Radey, Esquire Elizabeth McArthur, Esquire Monroe Park Tower
Suite 1000
Tallahassee, FL 32314
Kenneth F. Hoffman, Esquire 2700 Blairstone Road
Tallahassee, FL 32314
Gregory L. Coler, Secretary Dept. of Health and
Rehabilitative Services 1323 Winewood Blvd.
Tallahassee, FL 32399-0700
John Miller, General Counsel Dept. of Health and
Rehabilitative Services 1323 Winewood Blvd.
Tallahassee, FL 32399-0700
R. S. Power, Agency Clerk Dept. of Health and
Rehabilitative Services 1323 Winewood Blvd.
Tallahassee, FL 32399-0700
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AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
HUMANA OF FLORIDA, INC.,
d/b/a HUMANA HOSPITAL LUCERNE,
Petitioner,
CASE NO.: 89-1279
vs. CON NO.: 5696
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES and CENTRAL FLORIDA REGIONAL HOSPITAL INC., d/b/a CENTRAL FLORIDA REGIONAL HOSPITAL,
Respondents.
/ HUMANA OF FLORIDA, INC.,
d/b/a HUMANA HOSPITAL LUCERNE,
Petitioner,
CASE NO.: 89-1280
vs. CON NO.: 5695
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES and WINTER PARK MEMORIAL HOSPITAL ASSOCIATION, INC. d/b/a WINTER PARK MEMORIAL HOSPITAL,
Respondents.
/ FLORIDA HOSPITAL,
Petitioner,
CASE | NO.: | 89-1282 | |
vs. | CON | NO.: | 5695 |
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES and PARK MEMORIAL HOSPITAL ASSOCIATION INC., d/b/a WINTER PARK MEMORIAL HOSPITAL, |
Respondents.
/ FLORIDA HOSPITAL,
Petitioner,
CASE NO.: 89-1283
vs. CON NO.: 5696
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES and CENTER FLORIDA REGIONAL HOSPITAL,
Respondents.
/
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.
RULINGS ON EXCEPTIONS FILED
BY WINTER PARK MEMORIAL HOSPITAL (WPMH)
WPMH excepts in whole or in part to findings of fact 17, 19, 21, 25, 28,
33, 36, 37, 38, 39, 41, 42, 43, 44, 45, and 46. The findings are supported by competent, substantial evidence; therefore, the exceptions are denied.
WPMH excepts to the Hearing Officer's criticism of the department's "averaging" interpretation of the numeric need formula. Section 10-5.011(1)(f)8 and 11, Florida Administrative Code. Subparagraph 11 of the numeric need rule reads as follows:
11.a. There shall be no additional open heart surgery programs unless:
the service volume of each existing and approved open heart surgery program within the service area is operating at and is expected to operate at a minimum of
350 adult open heart surgery cases per year ...
the conditions specified in subparagraph 5.4, above, will be met by the proposed program.
(b) no addition open heart surgery programs shall be approved which would reduce the volume of existing open heart surgery facilities below
350 open heart surgery procedures annually for adults ...
Section 10-5.011(1)(f)11, Florida Administrative Code.
The 350 procedure level is an important threshold bearing on quality of care (see finding 19 and 20 Recommended page 13). It has been found repeatedly in administrative review of applications for open heart surgery programs that there is a direct relationship between the volume of procedures and quality of care, and that the patient death rate increases substantially in hospitals doing less than 350 procedures per year. See St. Joseph's Hospital vs. HRS, 11 FALR 5793 at 5801, 5803, and 5805 (HRS 6/23/89); Sarasota County Public Hospital Board vs. HRS, 11 FALR 6248 at 6258 (HRS 9/28/89), Mease Health Care and St.
Anthony's Hospital vs. HRS, Case Numbers 89-0726 and 89-0727, Recommended Order of November 29, 1989, page 16, finding 21, Hillsborough County Hospital Authority and Lakeland Regional Medical Center vs. HRS and Winter Haven Hospital, Inc., Case Numbers 89-1286 and 89-1287, Recommended Order of December 7, 1989, page 33, finding 55.
I conclude that the rule should be applied as written and that numeric need should be found only where each existing and approved open heart surgery program within the service district is operating at a minimum level of 350 open heart cases per year. The rule is sufficiently flexible in that it allows approval despite lack of numeric need where there is a "not normal" situation. 1/ It is good health planning to allow newly approved providers to become operational and reach the 350 procedure level as soon as possible and before new programs are authorized.
I am not unmindful that the conclusion reached here departs from an established practice of interpreting subparagraph 11 of the need rule by averaging the number of cases done by the existing providers and finding subparagraph 11 to be satisfied if the average was 350 cases or more. As previously stated, I am now satisfied that application of the rule as written is more consistent with sound health planning. I also note that in Lakeland
Regional Medical Center et al vs. HRS et al, Case Number 89-2157R (DOAH 11/15/89), the averaging policy was declared to be an invalid exercise of delegated legislative authority. The exception is denied.
RULINGS ON EXCEPTIONS FILED
BY CENTRAL FLORIDA REGIONAL HOSPITAL (CFRH)
CFRH also excepts to the Hearing Officer's criticism of the department's "averaging" interpretation of the need rule. This exception is denied.
CFRH excepts in whole or in part to findings of fact 19, 20, 21, 23, 26
through 28, 29, 30 through 32, 33, 37, 38, 39 through 42, 43, and 46. The findings are supported by competent, substantial evidence; therefore, the exceptions are denied.
RULING ON EXCEPTIONS FILED BY HUMANA
Humana expresses its support for the Recommended Order.
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 except were inconsistent with this Final Order.
The Hearing Officer found that many of the CON review criteria were not satisfied and, further, that no health planning purpose would be served by approving either of these two applications.
I concur with the Hearing Officer's balancing of the criteria which she summarized as follows:
Additional open heart surgery programs are not needed in District 7. The expenditure of approximately $5.8 Million in construction and start-up costs, the dilution of scarce staffing resource, the real potential that existing programs will suffer substantial financial losses, the real risk that declining volume at existing programs will lead to poorer quality of care or that the new programs will fail to achieve their hoped for volume, are not outweighed by enhanced convenience' to patients, their families and physicians. (Recommended Order, page 22).
Based upon the foregoing, it is
ADJUDGED, that the application for CON 5696 by Central Florida Regional Hospital, Inc. be DENIED and that the application for CON 5695 by Winter Park Memorial Hospital be DENIED.
DONE and ORDERED this 23rd day of January 1990, in Tallahassee, Florida.
Gregory L. Coler Secretary
Department of Health and Rehabilitative Services
by Deputy Secretary for Programs
ENDNOTE
1/ All applicable criteria are weighed in making a decision on a CON application and the lack of numeric need may be outweighed where there is a not normal situation. Subparagraph 2 of Section 10-5.011(1)(f), Florida Administrative Code.
COPIES FURNISHED:
Richard Patterson, Esquire Assistant General Counsel Department of Health and
Rehabilitative Services 2727 Mahan Drive
Fort Knox Executive Center Tallahassee, FL 32308
Mary Clark Hearing Officer
DOAH, The DeSoto Building 1230 Apalachee Parkway
Tallahassee, FL 32399-1550
Jeffery A. Boone, Esquire Robert T. Klingbeil, Esquire BOONE, BOONE, KLINGBEIL,
BOONE, & ROBERTS, P.A.
Post Office Box 1596 Venice, FL 34284
John Radey, Esquire ***** SERVED BY HAND DELIVERY 1/24/90 ***** Elizabeth McArthur, Esquire
AURELL, FONS, RADEY & HINKLE
Ste 1000, 101 N. Monroe Street Post Office Drawer 11307 Tallahassee, FL 32302
Susan Lincicome (PDRH) Kenneth F. Hoffman, Esquire OERTEL, HOFFMAN, FERNANDEZ, &
COLE, P.A.
P.O. Box 6507
Tallahassee, FL 32314-6507
James C. Hauser, Esquire BLANK, HAUSER & AMUNDSEN
Post Office Box 1876 Tallahassee, FL 32301 FALR Post Office Box 385 Gainesville, FL 32602
Wayne McDaniel (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 25th day of January, 1990.
R. S. Power, Agency Clerk Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407
Tallahassee, Florida 32399-0700 904/488-2381
NOTICE OF RIGHT TO JUDICIAL REVIEW
A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF HRS, AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.
| Issue Date | Proceedings |
|---|---|
| Dec. 12, 1989 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Jan. 23, 1990 | Agency Final Order | |
| Dec. 12, 1989 | Recommended Order | No need for additional open heart surgery programs in district 7. HRS policy of ""averaging"" in rule methodology not properly explicated. |
