STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NME HOSPITALS, INC., d/b/a ) PALMS OF PASADENA HOSPITAL, )

)

Petitioner, )

)

vs. ) CASE NO. 89-1425

) CON CASE NO.5681

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

) MEASE HEALTH CARE, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 89-1426

) CON CASE NO.5680

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

)

and )

) MORTON F. PLANT HOSPITAL, INC., )

)

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 December 12-13, 1989, in St. Petersburg, Florida; December 14-15, 1989, in Dunedin, Florida; and December 18-20, 1989, in Tallahassee, Florida.

The following appearances were entered:

APPEARANCES

For Petitioner NME HOSPITALS, INC., d/b/a PALMS OF PASADENA HOSPITAL:

C. Gary Williams, Esq. Stephen C. Emmanuel, Esq.

227 S. Calhoun St.

P.O. Box 391 Tallahassee, FL 32302

For Petitioner MEASE HEALTH CARE, INC:

Kenneth F. Hoffman, Esq.

W. David Watkins, Esq.

2700 Blair Stone Rd, Suite C

P.O. Box 6507

Tallahassee, FL 32314-6507

For Respondent DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES:

Edgar Lee Elzie, Jr., Esq.

215 S. Monroe Street, Suite 804

P.O. Box 804 Tallahassee, FL 32302

For Intervenor MORTON F. PLANT HOSPITAL, INC:

Cynthia S. Tunnicliff, Esq. Loula Fuller, Esq.

215 S. Monroe St., Suite 410

P.O. Drawer 190 Tallahassee, FL 32302

STATEMENT OF THE ISSUES

The issues for determination are whether Petitioners should be awarded certificates of need authorizing the establishment of inpatient cardiac catheterization services at their respective facilities.

As a result of stipulations of the parties, matters for consideration with regard to award of those certificates of need primarily involve a determination as to whether Petitioners' applications meet rule criteria relating to need (numeric and non-numeric), provision of a written protocol or transfer agreement, and utilization standards.

PRELIMINARY STATEMENT

On January 23, 1989, Petitioner Mease Health Care, Inc., requested a formal administrative hearing to contest Respondent's denial of its application for a Certificate of Need to establish inpatient cardiac catheterization services.

On February 22, 1989, Petitioner NME Hospitals, Inc., d/b/a Palms of Pasadena Hospital, also requested a formal administrative hearing to contest the denial of its application for a Certificate of Need to establish cardiac catheterization services.

Both matters were transferred to the Division of Administrative Hearings for the conduct of formal hearings pursuant to Section 120.57(1), Florida Statutes.

On March 3, 1989, Intervenor, Morton F. Plant Hospital, Inc., filed a petition to intervene in the proceeding requested by Petitioner Mease Health Care, Inc.

By order dated April 4, 1989, the request for intervention was granted due to Intervenor's status as a present provider of cardiac catheterization services

in the geographical service area covered by the application of Mease Health Care, Inc. That order further granted the motion of Petitioner NME Hospitals, Inc., d/b/a Palms of Pasadena Hospital, seeking consolidation of the administrative proceedings requested by both Petitioners.

Bayfront Medical Center, a full service not-for-profit community hospital located in St. Petersburg, Florida, petitioned for intervenor status on April 5, 1989, but subsequently dismissed that petition on October 10, 1989.

On September 8, 1989, Petitioner NME Hospitals, Inc., d/b/a Palms of Pasadena Hospital, requested a hearing regarding which administrative rule criteria would be applicable to the matters to be considered at the final hearing in this cause.

The concern regarding applicable rule criteria is the result of a challenge to certain of Respondent's amendments to the rule by which the Department of Health and Rehabilitative Services evaluates need for cardiac catheterization services, Rule 10-5.011(1)(e), Florida Administrative Code. Those amendments were the subject of a final order issued in DOAH Case Nos. 88-3970R, 88-4018R, and 88-4019R where the hearing officer held:

[T]he amendments to Rule 10.5.011(1)(e), F.A.C., published by the Department of Health and Rehabilitative Services on July 29, 1988, with the exception of the amendments to paragraph 2(h), paragraph 3(c) III, and paragraph 6(a) and the amendment regarding the definition of `inpatient visit' are an invalid exercise of delegated legislative authority, because they were adopted without adhering to the proper procedures for adoption delineated in Section 120.54, Florida Statutes.

Florida Medical Center v. DHRS, II FALR 3904 (Final Order issued June 29, 1989).

Following a hearing on September 11, 1989, the parties were informed by order dated September 20, 1989, that the undersigned intended to apply those provisions of the administrative rule criteria in existence prior to the successful challenge to the proposed amendments treated in DOAH Case Nos. 88- 3970R, 88-4018R, and 88-4019R. However, the parties were also informed that evidence would be received at the final hearing under either version of the rule criteria, absent conclusion of appeals instituted with regard to the final order entered in that case.

At the final hearing, Petitioner NME Hospitals, Inc., d/b/a Palms of Pasadena Hospital presented the testimony of 14 witnesses and 58 evidentiary exhibits. Petitioner Mease Health Care, Inc., presented the testimony of five witnesses and 12 evidentiary exhibits. Intervenor Morton F. Plant Hospital, Inc., presented the testimony of five witnesses and six evidentiary witnesses. The Department of Health and Rehabilitative Services presented one witness and one evidentiary exhibit.

The transcript of the final hearing, consisting of 14 volumes, was filed with the Division Of Administrative Hearings on January 18, 1990. The parties requested and were granted leave to file posthearing submissions more than 10

days after receipt of the transcript of the final hearing, and in accordance with Rule 221-6.031, Florida Administrative Code, waived provisions of Rule 28- 5.402, Florida Administrative Code.

Proposed findings of fact were submitted by the parties and are addressed in the appendix to this recommended order.

FINDINGS OF FACT

1. The legislature has deregulated the establishment of outpatient cardiac catheterization laboratories (cardiac cath labs), but a certificate of need (CON) is required before a hospital can operate an inpatient cardiac cath lab. The Department of Health and Rehabilitative Services (HRS) has not approved, as the result of initial agency action, a new cardiac cath lab CON in HRS' Service District Five since 1977.

   
   

   The Parties Palms

2. Petitioner NME Hospitals, Inc., d/b/a Palms of Pasadena Hospital (Palms), is a 310 bed acute care hospital located in Pasadena, Florida. Pasadena is geographically located in the southern portion of Pinellas County,

   Florida. Pasadena, though geographically small, is one of the most densely populated cities in the United States. Within one half mile of Palms are 10,000 people of whom 60 percent are 65 years of age or older.

   
   

3. Palms is a full service hospital with an extensive range of medical and surgical services, including a 24 hour emergency room; a coronary care intensive care unit; a surgical intensive care unit; and a respiratory intensive care unit. Palms also offers a full spectrum of non-invasive cardiology services including electrocardiography, echocardiagraphy, nuclear medicine, stress testing and 24 hour monitoring. Palms has five cardiologists, four of them invasive cardiologists, on its active staff and five cardiologists on its courtesy staff. The four invasive cardiologists would utilize a cardiac cath lab or program at Palms.

   
   

4. Palms is situated on 13 acres with a main hospital complex that encompasses over 400,000 square feet. There are over 300 physicians on Palms' medical staff, representing virtually every medical specialty. The hospital is accredited by the Joint Commission on Accreditation of Healthcare Organizations.

   
   

5. HRS Service District Number Five, which encompasses Palms location, is composed of Pinellas and Pasco Counties. The service district is heavily populated by persons age 65 and over; the persons who, nationally, have the highest rate of cardiac catheterization admissions per 1,000 persons. The rate for deaths resulting from major cardiovascular diseases and heart disease in Pinellas County is 150 percent above the rate for such deaths within the entire State of Florida. Notably, thirty percent of the approximately 200,000 persons within Palms' primary service area are age 65 or older. Further, sixty-eight percent of Palms' patients are medicare patients with an average age of 77 to 78 years. The average age of the medicare population at other hospitals in Pinellas County ranges from 72 to 73 years of age.

   
   

6. During 1987 and 1988, 516 inpatients at Palms required cardiac cath services (238 in 1987 and 278 in 1988). A diagnostic cardiac catheterization (cardiac cath) is an invasive medical operation in which a catheter is passed

   via vascular access in the arm or leg into the heart for purposes of diagnosing cardiovascular diseases or measuring blood pressure flow.

   
   

7. Significant advances in the technology of cardiac catheterization permits usage of cardiac caths in the emergency treatment of heart attacks through injection of thrombolytic agents directly into the blood clot causing the heart attack. While these medications can be given intravenously, such an option is not available in the case of elderly patients, who run a higher risk of internal bleeding as a side effect of the drug, and patients who delay seeking medical attention after the onset of a heart attack.

   
   

8. Approximately 30 percent of the patients arriving at Palms' emergency room have a cardiac related problem. The number of these patients who are candidates for intravenous injection of thrombolytic agents is small. Approval of Palms' application would significantly improve the quality of care of these patients by permitting the injection of thrombolytic agents directly into the blood clot causing the heart attack, a permitted medical procedure in the process of administering a diagnostic cardiac cath.

   
   

9. After the onset of a heart attack, there exists a six hour window during which potentially life-saving drugs can be administered. Due to the possible side effects of these drugs, cardiologists must often perform a cardiac cath to diagnose the ailment prior to administering the drugs. Consequently, patients who present themselves for treatment at Palms several hours after the onset of heart attack symptoms may be precluded from receiving these drugs in view of the lack of a cardiac cath lab or program at Palms.

   
   

   Mease

   
   

10. Petitioner Mease Health Care, Inc., (Mease) owns and operates Mease Hospital Dunedin and Mease Hospital Countryside. Mease also operates clinics located in New Port Richey, Palm Harbor, Countryside and Dunedin, Florida. These clinics serve a combined 350,000 patients per year.

    
    

11. Mease Hospital Dunedin is a 278 bed facility located in Dunedin, Florida. The Mease Dunedin Clinic houses approximately 60 physicians. Mease Countryside Hospital, opened in 1985, consists of 100 beds and is located approximately eight miles from Mease Hospital Dunedin. Approximately 30 physicians have offices at the Mease Countryside Clinic. Most physicians practicing in the clinics have hospital privileges only at the Mease facilities. Another 100 physicians on the staff of these two hospitals have practices in the surrounding area and admit patients to the Mease facilities.

    
    

12. Physicians housed in the Mease Countryside and Dunedin Clinics provide a significant source of patient referrals for the two hospitals, since most physicians practicing in the two clinics have hospital privileges only at the Mease facilities. Ninety percent of patients hospitalized by physicians in the two clinics are hospitalized in Mease Dunedin or Mease Countryside hospital facilities.

    
    

13. Mease currently operates a cardiac cath lab at its Mease Dunedin campus on an outpatient basis. This existing facility could be utilized by Mease for inpatient catheterization. The existing outpatient cath lab is outfitted with a Phillips Digital Cardiac Imaging System, the most medically advanced equipment of this type in Pinellas County.

14. Mease's current outpatient cath lab meets all applicable standards for the operation of an inpatient cath lab and is adequately staffed to perform 600 cardiac caths per year. There is no difference in the physical layout of an inpatient cath lab versus an outpatient cath lab.

    
    

15. Mease also provides diagnostic services such as echocardiography and nuclear cardiology. Growth in cardiology services experienced by Mease is consistent with the provision of these additional services.

    
    

    Morton Plant

    
    

16. Morton F. Hospital, Inc., (Morton Plant) is a not-for-profit 740 bed general acute care hospital spread among twelve buildings on a 36 acre campus in Clearwater, Florida, approximately three or four miles from Mease. Morton Plant offers a wide range of health care services, including cardiac cath, open heart surgery, a cardiac rehabilitation program, post-cardiac surgery recovery areas and intensive coronary care units.

    
    

    HRS

    
    

17. HRS is the state agency which is responsible for administering Sections 381.701 through 381.715, Florida Statutes, the "Health Facility and Services Development Act", under which applications for Certificates of Need (CON) are filed, reviewed, and either granted or denied by that department.

    
    

    Petitioners' Applications

    
    

18. The applications of Mease and Palms, seeking a CON to implement inpatient cardiac cath services were filed with HRS on September 28, 1988. After initial review, HRS sent omissions letters to the applicants on October 13, 1988. Responses from Mease and Palms were made on November 11, 1988, and HRS denied both applications on January 12, 1989. Both Petitioners timely requested formal hearings regarding the denials.

    
    

    "Old Rule Versus New Rule"

    
    

19. HRS has adopted procedures governing its review of applications, such as those of the petitioners, for CONs authorizing the establishment of inpatient cardiac catheterization programs. These procedures include HRS' numeric methodology for estimating need for cardiac cath labs or programs. This methodology has traditionally been found in Florida Administrative Code Rule 10- 5.011(1)(e).

    
    

20. On April 22, 1988, HRS published a proposed "new" rule containing a new methodology for estimating cardiac cath program need. A key component of the new rule is the use of "admissions" to a cardiac cath program, as opposed to the old rule's use of "procedures", to determine numeric need for additional CONs. The new rule was timely challenged by two parties in proceedings before the Division Of Administrative Hearings. However, the matters in dispute between HRS and the challengers were resolved and the proceedings voluntarily dismissed.

    
    

21. Subsequently, HRS filed the new rule as revised with the Secretary of State's office and published the new rule on July 29, 1988. The new revised rule was challenged within 21 days of publication pursuant to Section 120.54, Florida Statutes, by three new parties in Division Of Administrative Hearings Cases numbered 88-3970R, 88-4018R and 88-4019R. A Final Order eventually issued in those cases finding the rule challenges to have been timely brought pursuant

    to Section 120.54, Florida Statutes, and finding the revisions to be an invalid exercise of delegated legislative authority as a result of noncompliance by HRS with requirements of Section 120.54, Florida Statutes. Florida Medical Center

    v. DHRS, 11 FALR 3904 (Final Order issued June 29, 1989).

    
    

22. The Final Order in Florida Medical Center has been appealed. The parties to this proceeding were permitted to present evidence of need for the respective applications under both the new and old versions of Rule 10- 5.011(1)(e) Florida Administrative Code, although all the parties were informed by order dated September 20, 1989, that the undersigned intended to apply those provisions of the administrative rule criteria in existence prior to the successful challenge to the proposed amendments treated in the Final Order issued in Florida Medical Center.

    
    

    Stipulations

    
    

23. Palms and Mease stipulate that each other's application meets the quality of care criteria set forth in Section 381.705(1)(c), Florida Statutes. Morton Plant disputes only Mease's ability to insure quality of care through sufficient utilization. HRS stipulates that both applications meet quality of care criteria with the sole exception that neither applicant included a "written protocol" as noted on page II of the State Agency Action Report (SAAR). The parties stipulate that the requirement for a written protocol exists within the "new" version of the cardiac cath rule and not in the original version of the rule. The parties further stipulate that the terms "written protocol" and "transfer agreement" are not defined in either version of the cardiac cath rule.

    
    

24. The parties stipulate that criteria contained in Section 381.705(1)(e), Florida Statutes, (relating to operation of joint, cooperative or shared health care resources) are not applicable to either of the applications in this case.

    
    

25. HRS stipulates that criteria contained in Section 381.705(1)(f), Florida Statutes, (regarding the need within the service district of an applicant for special equipment and services not reasonably accessible within adjoining areas) are not applicable to either the Palms or Mease applications. Morton Plant contends these criteria are in issue with regard to Mease's application.

    
    

26. All parties stipulate that criteria contained in Section 381.705(1)(g), Florida Statutes, (relating to need for research and educational facilities in conjunction with the applications) are not in issue.

    
    

27. Criteria relating to manpower and resources contained in Section 381.705(1)(h), Florida Statutes, are not deemed applicable to the applications by HRS or the Petitioners. Morton Plant contends that these criteria are in issue with regard to the availability of necessary health manpower resources insofar as the Mease application is concerned.

    
    

28. Petitioners agree that their applications meet immediate and long term financial feasibility requirements of Section 381.705(1)(i), Florida Statutes. HRS also joins in that agreement, provided costs associated with the cardiac cath lab director at the lab proposed by Palms does not affect the financial feasibility of Palms' project. Morton Plant contests the long term feasibility of Mease's project.

29. All parties agree that criteria contained in Section 381.705(1)(m), Florida Statutes, relating to the costs and methods of proposed construction and equipment acquisition, are met by Palms' application and are not applicable to Mease's application.

    
    

30. Criteria contained in Section 381.705(1)(n), Florida Statutes, relating to provision of services to Medicare and medically indigent patients, are met by the Petitioners according to HRS. The other parties contend these criteria are in issue.

    
    

31. The parties agree that requirements of Section 381.705(2)(c) and (e), Florida Statutes, (relating to new construction alternatives and proposals for additional nursing bed capacity) are not applicable to the applications at issue in this case.

    
    

32. The parties agree that the licensure and accreditation of the parties are not in issue and need not be proven.

    
    

33. HRS stipulates that Palms' application and Mease's application satisfy all rule criteria under both the old and new versions of the cardiac cath rule with exception of those criteria relating to need (numeric and non-numeric), a written protocol or transfer agreement, and utilization standards set forth in the rule.

    
    

    Availability of existing services

    
    

    Palms

    
    

34. Palms' patients requiring the services of a cardiac cath lab must be transferred by ambulance to other facilities where such service is available. Most of these transfers are made to All Children's Hospital (All Children's) in St. Petersburg, Florida, the nearest facility with cardiac cath services. Cath procedures are performed at that facility by cardiologists possessing staff privileges at Palms, as well as All Children's.

    
    

35. On average, the transfer of a patient from Palms to All Children's takes an average of one and a half to two hours, although the actual automobile travel time is less than an hour. After a determination that a cardiac cath is needed, arrangements for the transfer involve negotiating an available time at All Children's and preparing the patient for transfer. Patient medical records are copied, consent forms signed, explanations given to patients and intravenous administration of fluids is begun.

    
    

36. Because of their unstable condition, specialized nurses, capable of interpreting cardiac monitors and administering drugs associated with cardiac problems, must accompany these cardiac patients in the ambulance.

    
    

37. All Children's ambulance is often not available for transfers from Palms. In those instances, Palms must provide an ambulance and nurse. If the need for such a transfer occurs in the middle of a nursing shift, Palms must pull a nurse from another unit in the hospital to accompany the patient. If plans for the transfer are known in advance of the beginning of a nursing shift, additional nursing staff is arranged for that shift.

    
    

38. Some patients experience difficulties in the course of such a transfer. The number of intravenous applications (IVs) attached to a patient is limited during an ambulance transfer, consequently some patients must have some

    IVs removed. During transportation of the patient, IVs are often shaken loose, medications become unbalanced, other medical appliances become disconnected and some patients experience blood loss as well as a loss of blood pressure. Some patients have required blood transfusions upon arrival at the cardiac cath facilities.

    
    

39. In view of the associated difficulties, some cardiovascular patients at Palms are simply too sick to undergo a transfer to another facility where cardiac cath services are available.

    
    

40. If a cardiac cath lab or program existed at Palms, an estimated

    $68,000 in transportation charges would be saved in the first year alone.

    
    

41. All Children's, a pediatric hospital, is the only hospital in the State of Florida that performs cardiac cath procedures on both adults and children in the same lab. Since All Children's is a tertiary, regional referral center, more than two thirds of the pediatric diagnostic cardiac caths are performed on nonresidents of the service district. Over 55 percent of all diagnostic cardiac caths at All Children's are performed on nonresidents of the district.

    
    

42. Angioplasty is a therapeutic, as opposed to diagnostic, cardiac cath procedure. Such cardiac caths can only be performed at facilities providing open heart surgery services. All Children's is the only hospital in South Pinellas County able to perform angioplasty.

    
    

43. All Children's has two cardiac cath labs. Both are heavily utilized. From July 1987 through June 1988, there were 1,268 cardiac admissions to the two labs. All Children's historic rate of 2.12 cardiac cath procedures per admission equates to 2,688 procedures performed on these patients. While this number of "procedures" is in excess of the minimum 600 "procedures" per lab standard applicable under the numeric need methodology used by HRS prior to publication of the proposed admission-based need determination formula, different definitions of the term "procedure" are ascribed to the term in accordance with the context of its usage.

    
    

44. Under HRS' proposed admission-based need determination formula, there were 1,099 adult cardiac cath admissions to All Children's program from April 1987 through March 1988. This number of admissions is substantially in excess of the 300 admissions per program standard required for program operation under the proposed new rule policy.

    
    

45. Currently 15 cardiologists normally use All Children's two labs on a regular basis. Three of these cardiologists deal with pediatric patients. A fourth pediatric cardiologist is being recruited by All Children's. This additional cardiologist will perform electrophysiology, a cardiac cath procedure involving use of multiple catheters. Electrophysiology studies are extremely time-consuming and this additional cardiologist's lab usage will contribute to present lab access difficulty.

    
    

46. Presently, All Children's has a "block time" schedule for the different cardiologists on the active staff at the hospital. Each cardiologist has a scheduled block of time for usage of the cardiac cath labs. As a result, a cardiologist can not have a patient, admitted during the previous night, catheterized on a particular day unless that physician's block of time happens to fall on that day. This process effectively eliminates a majority of time during the week when a cardiologist may schedule catheterization for a patient.

47. Pediatric cardiac caths require more lab time than adult cardiac caths and All Children's gives preference in scheduling caths to pediatric patients. Further, All Children's facilities are blocked all day on Mondays for pediatric patients.

    
    

48. It is not unusual, in view of the preference given pediatric patients and emergency cath requirements, for adult cardiac cath patients to be "bumped" from the schedule after their arrival at All Children's. The length of hospitalization of adult cardiac cath patients therefore increases, along with a substantial increase in the patient's medical care costs.

    
    

49. The decision of All Children's to block both of the hospital's labs for pediatric caths each Monday has resulted in the postponement of cardiac caths for Palms' patients until Monday night or Tuesday. The result is that weekend patients from Palms have a lengthened hospital stay, assuming the patients are stable and can endure the sometimes two or three days wait for a catheterization study.

    
    

50. Palms' cardiologists also experience difficulty placing their patients after catheterization at All Children's. Since All Children's is a pediatric hospital, there are no adult beds with the exception of eight intensive care beds which are usually filled by open heart and other surgical patients.

    
    

51. As a result of the lack of available beds at All Children's, alternatives are to transfer Palms' patients to Bayfront Medical Center, a facility adjoining All Children's, following catheterization, or return them by ambulance to Palms. This latter alternative is often followed since Bayfront Medical Center is frequently without available beds.

    
    

52. Since a significant percentage of diagnostic cardiac cath patients must later undergo a therapeutic catheterization, Palms' patients, who are returned to Palms after diagnostic catheterization, must be transferred back to All Children's for additional cath work. In one instance, a Palms' inpatient was transferred a total of nine times.

    
    

53. The difficulty of access to the cardiac cath labs at All Children's is particularly acute during the first quarter of each year when many elderly people come to the St. Petersburg area to enjoy the warmer climate.

    
    

54. Significant health care risks to delaying diagnostic cardiac caths include instances at Palms where patients with unstable angina have suffered large myocardial infarctions before their transfer to another facility's cardiac cath lab. These risks are enhanced for Palms' cardiac inpatients, many of whom have multiple health problems. Palms' inpatients have a higher comorbidity index than all other hospitals in the service district.

    
    

55. The approximately 30 primary care physicians on the active staff of Palms are not on the active staff of any other hospital. As a result, they are unable to follow their patients and continue treating their other ailments when those patients are transferred to another facility for cardiac catheterization work. If these primary care physicians could follow their patients, the quality of care would be improved.

    
    

56. In addition to difficulty obtaining timely access to All Children's cath labs, the volume of work performed at the lab has resulted in cardiac cath technicians requesting, on at least one occasion, that a catheterization be

    stopped due to the fatigue of the technicians. Approval of additional inpatient diagnostic cath labs or programs in the area would reduce or eliminate the occasions of such stoppage in the future.

    
    

57. Cardiac patients admitted to hospitals in the service district which do not have inpatient cardiac cath services wait, on the average, 1.5 days longer in the hospital before they receive catheterization than do those patients admitted to hospitals in the district providing such services. As a result, patients undergoing cardiac cath procedures and staying in a hospital without inpatient cardiac lab services average a stay which is 1.6 days longer than patients staying in a hospital with inpatient cath services.

    
    

58. If Palms were able to provide inpatient cath services, an average additional charge of $1,800 per patient undergoing cardiac cath would be eliminated. This equates to a total savings of $200,000 to $300,000 in medical costs from the reduction of the average length of stay as the result of an inpatient program at Palms. Since hospitalized patients are at increased risk for developing nosocomial illness, diseases or infections contracted during a hospital stay, reducing the length of stay also lessens the patient's opportunity to develop such an illness.

    
    

59. Approval of the Palms application, while temporarily lowering the number of diagnostic cardiac caths performed at All Children's, would eventually result in an increase in the number of cardiac caths performed at All Children's. This is particularly applicable to the increase in therapeutic caths that would occur at All Children's as the result of establishment of a diagnostic inpatient cardiac cath lab at Palms. The elderly and seasonal population which would be served by an inpatient cath lab at Palms would result in increased referrals from Palms to All Children's for therapeutic cath services.

    
    

60. Two other hospitals in South Pinellas County operate inpatient diagnostic cardiac cath labs, St. Anthony's Hospital (St. Anthony's) and Humana Hospital Northside (Humana). Since neither hospital provides therapeutic cath services, a patient transferred there from Palms for the purpose of a diagnostic cath must later be transferred a second time to All Children's in the event therapeutic services are required.

    
    

61. The diagnostic cardiac cath lab at St. Anthony's is owned and operated by the Rogers Heart Foundation, a private non- profit foundation. The emphasis at the Foundation on cardiac research has led to a very low use rate in its cath lab. Additionally, staff privileges are limited to those cardiologists willing to serve on rotation as an emergency room physician. As a result of the reluctance of cardiologists, who have limited their practice to cardiology, to meet the emergency room duty requirement, the staff of St. Anthony's is effectively a closed one.

    
    

62. The cardiac cath equipment at St. Anthony's is out- dated and fails to produce quality images. Problems have been encountered by cardiologists with the quality of film developed by St. Anthony's cardiac cath lab. Consequently, the lack of growth and modernization of the St. Anthony's lab does not present a reasonable alternative to Palms' application.

    
    

63. The alternative of Humana presents a shortage of intensive care and cardiac cath beds similar to that experience with All Children~s, especially

    during the winter months. Continued diagnostic catheterization of Palms patients at Humana will result in increased competition for an already insufficient number of beds.

    
    

64. Humana is located even further from Palms than All Children's, worsening the current problems associated with transfer of Palms' patients to All Children's. Further, Humana, according to the rate of admissions to its cath lab in the second year of operation, will Substantially exceed the new proposed HRS policy of 300 admissions required to justify a program's operation.

    
    

65. During 1988, Palms ranked fourth out of the 24 hospitals in the service district in the number of inpatients requiring diagnostic cardiac caths. If those hospitals operating cardiac cath labs are eliminated from the list, then Palms ranked first in the total number of inpatients requiring cath services at the remaining 17 hospitals.

    
    

66. In 1988, Palms' 278 inpatients requiring diagnostic cardiac cath services was more than the 219 at St. Anthony's and the 174 for Humana's first year, even though those facilities had cath labs. Palms' total also exceeded the 201 patients requiring this service at both of the Mease hospital sites.

    
    

67. The likelihood of discernable adverse impact on the cardiac cath programs at St. Anthony's and Humana as the result of establishing diagnostic cath services at Palms is small in view of the infrequent admission of Palms' patients to those programs.

    
    

68. Serious problems will continue to be experienced by Palms' patients in obtaining inpatient diagnostic cardiac cath services if the Palms application is denied. In view of the demographics of the surrounding area and patient age composition at Palms, establishment of a diagnostic cardiac cath program in that hospital would result in an improvement of the standard of care received by inpatients there.

    
    

69. The unique nature of All Children's primary mission as a pediatric hospital, and its inability to provide ready access to its cardiac cath labs by Palms' patients for the purpose of diagnostic cardiac cath services, coupled with other previously- noted access problems constitute exceptional and "not normal" circumstances sufficient to justify approval of a diagnostic cardiac cath lab at Palms without regard to numeric need requirements of either the "old" or "new" versions of Rule 10- 5.011(1)(e), Florida Administrative Code.

    
    

    Mease

    
    

70. Accessibility to health services has two aspects; geographical accessibility and financial accessibility. The "old" rule policy of HRS has a two hour travel standard within which a cardiac cath lab must be available. The proposed rule has a one hour standard.

    
    

71. Morton Plant is approximately three or four miles from the Mease Dunedin campus. Both hospitals provide services to the same population. The Mease Countryside Campus is approximately eight miles from the Mease Dunedin campus. The considerable testimony regarding the problem and inconvenience of transporting patients for cardiac cath presented by Palms is not appropriate to Mease.

    
    

72. The cardiac cath labs at Morton Plant are not overcrowded, although alternatives to that possibility are being contemplated in the future through

    the addition of another cardiac cath lab. Based upon projections presented at the final hearing, an additional cath lab may be necessary by 1991. The present labs are not utilized on the weekends except for emergencies and difficulty in scheduling a diagnostic or therapeutic cath is rarely encountered. However, a scheduling suggestion was made by Morton Plant officials, requesting that cathing cardiologists not schedule elective cardiac caths on Mondays and Fridays. But, Morton Plant has not implemented any rule making the cath labs unavailable for elective procedures at those times.

    
    

73. One of the Morton Plant labs has been in operation since 1985 and the equipment in that lab is scheduled to be replaced in the fall of 1990. This refurbishment should eliminate concerns regarding reliability of that lab's machinery, although all maintenance of the equipment in both labs is conducted at night to permit both labs to be functional during the day.

    
    

74. Mease opened an outpatient cardiac cath lab in April, 1989. Mease expects to perform 160 to 175 outpatient diagnostic caths in the first year of operation. The lab is not presently profitable.

    
    

75. However, transfer of inpatients to other facilities for purpose of inpatient caths does impact negatively on Mease. Mease loses approximately

    $133,000 per year as the result of inpatient transfers, exclusive of ambulance fees. These losses represent the difference between the medicare reimbursement to Mease and the charges that Mease must pay to the other facility for provisions of the inpatient cath services.

    
    

76. From October 1, 1988 through September 30, 1989, between 250 and 260 Mease inpatients were transferred to other facilities to receive inpatient caths. Ambulance cost per patient varies depending upon the destination facility which is generally either Largo Medical Center in Largo, Florida, for a charge of $436 round trip or Morton Plant for a round trip charge of $378.

    
    

77. An estimated one hour is needed to make the transfer of a patient from Mease to Morton Plant, although actual travel time to the nearby facility is obviously much less. The services of those Mease nurses who accompany each patient are unavailable to Mease for other services for approximately two hours.

    
    

78. The transfer of any inpatient to another hospital constitutes less than optimal care and can compromise patient safety as illustrated by one instance of the transfer of a Mease patient who suffered a major heart attack en route to another facility and became a "cardiac cripple." However, such examples with regard to accessibility to other facilities by Mease patients are not sufficient to constitute exceptional or not normal circumstances for purpose of granting the Mease application.

    
    

    Need For The Proposed Projects

    
    

79. Prior to publication of the new proposed rule, HRS recognized that multiple procedures may be performed on a single patient during one admission to a cardiac cath lab. However, in the course of application of the old rule methodology to determine need for additional cardiac cath CONs, HRs did not, as a matter of operational policy, ascribe that same meaning to the term "procedures" in formula computations made to determine numeric need for those labs.

    
    

80. Typically, a patient undergoes more than one procedure in the course of a cardiac cath. To determine an actual number of procedures, in the generic

    sense of the word, performed by existing cardiac cath labs in the service district, Mease and Palms subpoenaed information from all those labs. As a result of that effort, Mease and Palms have shown that 7,507 cardiac cath procedures were performed in the service district during the period July 1987 through June 1988. Of this total, approximately 5,081 were diagnostic cardiac caths.

    
    

81. Cardiac cath lab admissions for diagnostic and therapeutic cardiac caths during the July 1987 through June 1988 period totaled 4,057 patients in the service district, averaging 1.85 procedures per cath lab admission. Similarly, diagnostic cardiac caths averaged 1.47 procedures per admission.

    
    

82. A Diagnosis Related Group (DRG) is a combination of variable diagnoses codes and procedure codes that are used by Medicare to assign a fixed level of reimbursement to the type of medical services rendered by a provider.

    
    

83. The term ICD-9CM Code is an acronym for the Internal Classification of Diseases, 9th Revision, Clinical Modification. The ICD-9 coding system is a classification for morbidity and mortality statistics which are modified for use in the United States for statistical collection. There are five diagnosis codes which identity conditions treated and three procedure codes identifying the type of treatment provided.

    
    

84. The federal government and the State of Florida's Health Care Cost Containment Board (HCCCB) require that Florida hospitals maintain and report ICD-9-CM Code information. The American Hospital Association, with input from

    the federal Health Care Financing Administration, the National Center for Health Statistics, and the American Medical Records Association, publishes standards and rules to ensure uniformity in the reporting of ICD-9 information. Further, the Peer Review Organization, as part of its contract with the Health Standards Quality Bureau, reviews the accuracy of ICD-9 coding by hospitals.

    
    

85. Florida hospitals report ICD-9 information to the HCCCB by filling out a Uniform Hospital Discharge Data Sheet for each patient. The HCCCB requires Florida hospitals to report up to five diagnosis and three procedure codes.

    
    

86. Different ICD-9 codes are assigned for different types of cardiac catheterization procedures. Hospitals are expected to Code each individual cardiac catheterization procedure performed on the patient in accordance with specific instructions published by the American Hospital Association.

    
    

87. ICD-9 code information reported to the HCCCB by existing providers of cardiac cath services in the service district corroborates the findings derived by Petitioners from information obtained through subpoenas to those providers, and verifies there is generally some multiple of ICD-9 code procedures per patient in a single admission.

    
    

88. While ICD-9 code information is the most reliable tool available for health care planning purposes, the counting of procedures by those codes is not an appropriate measuring tool or good indication of need for two reasons. First, certain procedures may be a component of each and every catheterization, such as pressure measurements and angiography. The same amount of time and resources per patient are utilized regardless of whether the event is recorded

    as one "admission" or two "procedures". Secondly, different hospitals do record or code the various procedures differently, thereby skewing the results of any attempt to average procedures district wide in order to develop a ratio of procedures to admissions. In this regard, it is noted that Mease and Morton

    Plant do not code angiography as a separate procedure, consequently they have a low ratio of procedures to admissions in comparison to Palms.

    
    

89. In developing its proposed new rule policy, HRS considered methodical scenarios for converting prpcedures to admissions, including a conversion factor of 1.2 procedures per admission and a conversion factor of 1.9 procedures per admission. Neither of these conversion options are utilized in the proposed new rule. Further, the evidence presented at the final hearing fails to establish that HRS has in place any methodology for the conversion of cardiac cath lab procedures to admissions to cardiac cath programs.

    
    

90. Petitioners contend that HRS relied in the past upon local health councils to gather the correct number of cardiac cath lab procedures performed by existing labs in a service district, and that hospitals with cardiac cath labs erroneously reported lab admissions to the District Five Local Health Council rather than the total number of procedures performed in the labs. Petitioners further contend that as a result of unwitting reliance upon the number of cardiac cath lab patient admissions instead of the number of procedures performed on patients admitted to those labs, HRS historically suppressed projections of cardiac cath lab need in the Service District Five when applying the "old" rule. The weight of the evidence presented at the final hearing supports a finding that actual need may be at some minor variance with that projected by HRS' need formula computation under the old rule. The extent that such need exceeds the projected amount, while not totally capable of discernment on the basis of the evidence presented, is probably in the neighborhood of 1.01 procedures per admission. It is found that HRS did not intentionally suppress need projections in the district and that the minor variance shown does not substantially affect numeric need determinations calculated under the old rule.

    
    

91. As previously alluded to above, the term "procedure" in the rule methodology previously utilized by HRS historically meant the aggregate of what is performed on one admission to a cardiac cath lab. The old rule was based on federal guidelines providing that procedures were equal to an admission. At the time the old rule was written, the terms "cases", "cardiac catheterization", and "cardiac catherization procedures" were used interchangeably with the advent of DRGs for medicare reimbursement purposes, hospitals responded to local health councils' data collection requests by reporting "Procedures" used for reimbursement purposes. The resultant confusion spawned the motivation for HRS to propose the new rule methodology which uses the term "admission."

    
    

92. HRS reviewed the applications at issue here pursuant to the proposed new rule and its "admissions" based numeric need methodology. That review, conducted on the basis of admissions, was consistent with the policy of HRS to interpret the term "procedure" to mean "admission." Further, in view of the equivalency accorded the those terms by HRS, the number of procedures for purposes of numeric need calculation under the "old" rule formula does not require inflation in order to apply the old rule's numeric need formula. HRS has candidly admitted that various providers reported the number of "admissions" rather than "procedures".

    
    

93. The policy of HRS, although subject to a minor margin of error with the advent of DRGs, to count admissions as procedures is one that has been consistently and fairly applied without regard to whether the result led to the granting or denial of a particular application. From a health planning perspective, an admission or patient is the appropriate unit of measurement to

    determine future need for cardiac cath services. The goal of the CON program is to ensure an appropriate allocation of services while controlling capital expenditures.

    
    

94. The Petitioners contend that cardiac catheterization admissions are not a good measure of resource consumption and that the type of catheterization, i.e., adult versus pediatric and therapeutic versus diagnostic, should be considered. To an extent, the position is well taken, but in the absence of an agency policy that measures numeric need in that fashion, the alternative proposed by the Petitioners is unpalatable. The Petitioners' overly broad proposal for consideration of "procedure" as a multiple of "admission" for purposes of need formula computation results in a proliferation of cardiac cath labs in derogation of the CON program goal previously mentioned.

    
    

95. The use of 300 admissions as a minimum number required for a new lab under the proposed "new" rule is not a recognition by HRS of any applicable conversion factor of procedures to admissions. Instead, the number of 300 admissions is a standard that must be met after all existing providers have their present patient volume protected, as opposed to a simple minimal admission number required to maintain skill proficiency of medical personnel. Under the old rule, a volume of only 600 patients per lab is protected in contrast to the new rule's proposal to protect uncapped patient volume in existing cardiac programs. To that extent, the old rule does not place the same emphasis on utilization of existing labs or programs as does the new rule.

    
    

96. HRS' SAAR on the Petitioners' applications confirmed a total of 4,712 admissions to cardiac cath labs in the service district from April, 1987 until March, 1988. If the number of admissions is equated to mean the number of procedures, in accordance with HRS rule policy applied to the formula previously used to determine numeric need, then the result of that computation under the "old" rule is no numeric need for additional cardiac cath labs in the service district.

    
    

97. Likewise, computations under the proposed "new" rule need formula utilizing reported admissions during the base period also results in a finding of no numeric need for additional cath labs in the district.

    
    

    Out-migration

    
    

98. While it is conceded by the parties that strict application of the numeric need methodology of the proposed "new" rule results in a finding of no need for additional cardiac cath labs, Petitioners contend that HRS is required to factor into that new need methodology the number of residents in the service district who go outside the district to obtain cardiac cath services. While subsection h of the "new" rule requires that HRS consider such data in the determination of need, there is no requirement that the number of such residents be included within the need determination formula. As established at the final hearing, out-migration serves to establish need for a facility, in the absence of numeric need, where it is shown that residents are leaving the service district due to unavailability of the services within the district. While residents are leaving the service district in this instance to obtain cardiac cath services, the evidence fails to establish that this action is due to service unavailability.

    Quality Of Care

    
    

99. The parties stipulated that both applicants partially meet the statutory requirement requiring proof of the ability to render quality care and the previous record of the applicant to render quality of care. HRS contends both applicants failed to a provide a "written protocol" for the transfer of emergency patients to open heart surgery providers in compliance with requirements of the "new" rule. HRS concedes that both applications meet quality of care requirements, including those relating to a "transfer agreement" if reviewed under the "old" rule.

    
    

100. HRS has not formally defined the term "written protocol", but no evidence exists that either applicant would fail to provide quality of care with regard to transfer of patients in the event such became necessary. The purpose of a written protocol is to assure HRS that proper quality of care procedures would be used in transferring open heart patients. HRS professes confidence in the ability of the applicants to perform this service and therefore this requirement is considered fulfilled in the event approval of the applications is determined pursuant to provisions of the "new" rule.

     
     

     Availability Of Resources

     
     

101. Morton Plant's concerns regarding Mease's ability to render quality of care are restricted to whether Mease has provided for sufficiently trained staff to handle the projected volume of cases in the event that Mease's application is approved. Availability of appropriately trained professionals is also a Morton Plant concern. The projections of Mease for salaries, number of employees, expenses, training or acquisition of employees, and overtime costs are reasonable and meet requirememts relating to availability of resources.

     
     

     Consistency With State And Local Plans

     
     

102. The state health plan in effect when these applications were filed contains a goal that an average of 600 cardiac cath procedures per lab be maintained within the district. HRS found this provision of the state health plan to be inapplicable since these applications were not reviewed in conjunction with requirements of the "old" rule. Regardless of this omission, neither application meets this goal in view of the traditional interpretation accorded the term "procedures" by HRS.

     
     

103. With regard to the district plan, all counties within Service District Five have existing or approved cardiac catheterization providers. With the exception of the access difficulties noted with regard to Palms, services are well distributed. Neither applicant is a major referral hospital, although both have traditionally served all patients without regard to the ability of the patient to pay.

     
     

     Adequacy And Availability Of Other Services

     
     

104. There are other existing providers of diagnostic inpatient cardiac cath services available in service district five, whose capacity is not fully utilized. Mease, whose Dunedin campus is located only three to four miles from Morton Plant, proposes to provide services to the same patient population. As previously noted, the concerns about the adequacy of equipment in one of the Morton Plant cath labs is in the process of being addressed through the installation of new equipment in the fall of 1990.

105. Although there are existing providers available, the instances of access difficulty recited by witnesses for Palms are likely to be compounded as more patients undergo cardiac catheterization at those alternative facilities in the future.

     
     

106. The demographics of Palms' elderly and multiple illness-laden inpatient population increase the complications likely to be experienced by those inpatients during transfer for purposes of diagnostic catheterization. Likewise, outpatient cath lab establishment would not be a realistic alternative for these patients, or a cost effective measure. While many inpatients would invariably have to be transferred later for therapeutic cath services, the rigors of such a journey would be avoided initially for all inpatients and a considerable number of inpatients thereafter.

     
     

     Impact On Existing Costs

     
     

107. No testimony presented at final hearing supports a finding of an adverse impact on any existing provider in the event that Palms' application is approved. Of the three other full service hospitals in Palms' primary service area, only one has a cardiac cath program.

     
     

108. Palms projects savings from the elimination of ambulance transfers and reductions in the length of stay for Palms' inpatients receiving diagnostic cardiac caths at approximately $157,000 in the first year of operation. Cost per cardiac cath patient for this service would be approximately $2,200 on average, an amount comparable to other providers in the Palms area.

     
     

109. One thrust of Mease's argument, in terms of impact of its program upon the costs of inpatient cardiac cath, is directed to the losses which Mease experiences through the transfer of inpatients to Morton Plant. While increased utilization of Mease's present outpatient cardiac cath lab by its inpatients would decrease or eliminate the present loss of income experienced by the hospital, the burden of that cost benefit to Mease falls upon Morton Plant.

     
     

110. The number of inpatients projected by Mease would be derived primarily from individuals who would otherwise receive cardiac cath services at Morton Plant. Approximately 30 percent of the total procedures performed at Morton Plant would be lost if the Mease application is approved. Such a loss would not be detrimental to the Morton Plant program, other than to require Morton Plant to postpone future contemplated increases in the number of cardiac cath labs in the present program.

     
     

111. Approval of the Mease application would increase competition to some degree among other providers of diagnostic cath services to inpatients in Mease's primary service area. As previously noted, the impact of competition would be primarily upon Morton Plant, whose cardiac cath facilities, while nearing capacity limits, are not over utilized at the present time. Mease estimates that an average cath charge to inpatients would be $1,500 if its CON is approved. The loss of revenue to Morton Plant will average $1,606 for each inpatient cath lost to another facility, or $511,000 if Mease's application is approved. This amount closely approximates the positive revenue impact of

     $563,785 estimated by Mease in the event of CON approval.

     
     

     Financial Feasibility

     
     

112. All parties, except HRS, stipulated that Palms' application was financially feasible. HRS' position was that Palms' application met this

     criterion, provided costs of Palms' cardiac cath lab director did not affect financial feasibility. Palms presented evidence at the final hearing amplifying the information in its application and establishing that the cost of the lab director will not affect financial feasibility of the project. The directorship will be a voluntary, non-paying position rotated among the cardiologists with privileges to perform catheterizations. Palms' proposal is financially feasible.

     
     

113. HRS stipulated that Mease's project is financially feasible. Morton Plant disputes the long term financial feasibility of Mease's project. Mease maintains that its provision of inpatient cath service will have no cost because the equipment has already been purchased and is being used to do outpatient caths. However, Mease also has an expense item on its inpatient pro forma for depreciation of that same equipment and maintains that the cost for providing the cath service will decrease as costs will be spread over more patients with the advent of inpatient cath services. The more reasonable assumption is that the cost of the equipment is a cost associated with the present CON application, particularly since Mease admits to the motivation of implementing outpatient service in an attempt to enhance the probability of obtaining an inpatient lab. Notwithstanding this cost discrepancy, Mease's application is financially feasible.

     
     

     Medicaid And Medically Indigent

     
     

114. HRS has stipulated that the Petitioners' past and proposed provision of health care services to Medicaid patients and the medically indigent is not at issue. However, the parties contend that the matter is in issue between them.

     
     

115. As a not-for-profit hospital, part of Mease's mission is to provide needed medical care, independently of the patient's ability to pay. Mease would apply this same philosophy to patients needing services in its inpatient cath lab.

     
     

116. Mease provides its fair share of medicaid and charity services relative to the community in which it is located.

     
     

117. Palms has made a commitment to serve all patients regardless of ability to pay. Palms does not have any policies which would discourage Medicaid patients.

     
     

     Comparative Review

     
     

118. There is insufficient numeric need under either the new or old rule formula to approve either of the Petitioners' applications on that basis. However, Palms presented considerable evidence of exceptional and not normal circumstances justifying approval of its application. In particular, the overcrowding at All Children's, inpatient transfer problems, the severity of the scheduling difficulties at All Children's and other access problems provide an adequate basis for approval of the Palms application.

     
     

119. Palms generates more inpatients requiring inpatient diagnostic cath services than does Mease. Notably, 4.76 percent of the total service district diagnostic cath inpatients originate from Palms as opposed to 3.37 percent for Mease.

120. The average age of Palms' inpatients is higher than that of Mease's inpatients. Palms' inpatients have a higher comorbidity index than both Mease and the service district as a whole. Palms has had, historically, more inpatients in the 45-64 age cohort and the over age 65 cohort undergo cardiac cath than has Mease.

     
     

121. Mease provides more Medicaid care than Palms, but Palms does not provide obstetrics and pediatric services, two areas of care traditionally high in Medicaid utilization. If the comparison is limited to Medicaid utilization for cardiology services, Palms ranks higher than Mease.

     
     

122. Capital costs of Mease's construction of an outpatient lab capable of provision of inpatient services is not included in its application, although depreciation and amortization of the lab and equipment is included. Mease's outpatient lab was constructed in an effort to improve its application for a CON to provide inpatient services, therefore exclusion of that cost results in an unfair comparison of capital expenditure between the two applications. Discounting Mease's claim that its provision of inpatient cath service will have no cost because the equipment has already been purchased and is being used to do outpatient caths, the application of Palms is superior to that of Mease.

     
     

     CONCLUSIONS OF LAW

     
     

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

     
     

124. Petitioners bear the burden of establishing entitlement to the Certificates of Need they seek. Florida Department of Transportation v. J. W.

     C. Company, Inc., 396 So.2d 778 (Fla. 1st DCA 1981). Specifically, Petitioners must establish their 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., Department of Health and Rehabilitative Services, 462 So.2d 83 (Fla. 1st DCA 1985).

     
     

125. The parties contend that a central issue in this case is whether the pre-April 22, 1988, version of Rule 10- 5.011(1)(e), Florida Administrative Code or the version of the rule published in the July 29, 1988 edition of the Florida Administrative Weekly (the "new" rule) should apply.

     
     

126. Fundamental distinctions exist between the effect of a rule challenge to an existing rule filed pursuant to Section 120.56, Florida Statutes, and those filed pursuant to Section 120.54, Florida Statutes, to challenge newly promulgated rules or amendments. Successful challenges to existing rules invalidate those rules after the entry of a final order and the expiration of the time for filing any appeal. Section 120.56(3), Florida Statutes. Conversely, newly promulgated rules (or amendments to those rules) become effective after the entry of a final order declaring the rules to be valid. Section 120.54(4)(b), Florida Statutes.

     
     

127. The initial amendments to Rule 10-5.011(1)(e), Florida Administrative Code, were prevented from becoming effective as a result of the initial challenges. After the rules were republished on July 29, 1988, with substantial changes, Section 120.54(4)(c), Florida Statutes, prevented those changes from becoming effective since new petitions challenging the new amendments were timely filed. It is well settled that the filing of a timely petition renders

     agency action preliminary and non- final regardless of how the agency characterizes that action. Boca Raton Artificial Kidney Center, Inc. v. Dept. of HRS, 475 So.2d 260 (Fla. 1st DCA 1985); Capeletti Bros., Inc. v. State Dept. of Transportation, 362 So.2d 346 (Fla. 1st DCA 1985).

     
     

128. Irrespective of which rule is applied in the present case, there is no numeric need under either the old rule or new rule for additional cardiac cath labs or cardiac cath programs in the service district at the present time. However, as stated by the Hearing Officer in Nu-Med Pembroke, Inc. d.b.a. Pembroke Pines General Hospital v. Department of Health and Rehabilitative Services and South Broward Hospital District, DOAH Case NO. 89-1255 (Recommended Order issued January 19, 1990):

     
     

     An applicant's failure to demonstrate the existence of need pursuant to this formula, however, is not necessarily fatal to its application. It still may be entitled to the certificate of need it has requested if it is able to show that there are unusual or unique circumstances present which justify the granting of the application. See NME Hospitals, Inc. v. Department of Health and Rehabilitative Services, 494 So.2d 256, 257 (Fla. 1st DCA 1986).

     
     

129. The foregoing statement was made by the Hearing Officer in Pembroke Pines where he concluded the nonexistence of numeric need pursuant to application of the "new" rule's admission based methodology to the facts of that case. The statement is also appropriate in the instant case in the absence of numeric need under either version of the rule.

     
     

     Section 381.705(1)(a), Florida Statutes

     
     

130. Section 381.705(1)(a), Florida Statutes, states that the applications must be considered in the context of:

     
     

     The need for the health care facilities and services and hospices being proposed in relation to the applicable district plan and state health plan, except in emergency circumstances which pose a threat to the public health.

     
     

     In view of the lack of numeric need under either version of HRS' rule, the applications do not comport with need provisions of the State and Local Health Plans.

     
     

     Section 381.705(1)(b), Florida Statutes

     
     

131. Section 381.705(1)(b), Florida Statutes, states that review of the applications must made be in the context of:

     
     

     The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospices in the service district of the applicant.

     The evidence establishes that existing Morton Plant labs within Mease's primary service area are nearing maximum capacity, but accessibility has not yet become a major problem. Otherwise, the Mease application meets this criteria.

     Palms' application is compliant with this criteria as the result of the not normal circumstances surrounding accessibility to cardiac cath patient services.

     
     

     Section 381.705(1)(c), Florida Statutes

     
     

132. Both applications meet the requirement of Section 38I.705(1)(c), Florida Statutes, relating to the applicant's ability to provide quality of care. HRS concedes that requirements for a "transfer agreement" are met in accordance with the old rule requirements. The proof establishes that Petitioners are also compliant with the requirement for a "written protocol" in accordance with requirements of the new rule.

     
     

     Section 381.705(1)(d), Florida Statutes

     
     

133. Section 381.705(1)(d), Florida Statutes, requires that availability and adequacy of other health care services and facilities in the service district be considered as alternatives. With regard to Palms, there are no alternatives to an inpatient cath lab which would resolve the present accessibility difficulties for Palms' inpatients. Alternatives to the Mease application include facilities at Morton Plant, which may serve as an adequate alternative until patient volume there dictates the addition of another cardiac cath laboratory. At that time, economies of scale would dictate the expanded usage of Mease's existing outpatient lab as opposed to additional investment by Morton Plant in further capital expenditure.

     
     

     Section 381.705(1)(e),(f),(g) and (h), Florida Statutes

     
     

134. The criteria contained in Section 381.705(1)(e),(g) and (h), Florida Statutes, were deemed by HRS to have been met or not applicable to these applications. Morton Plant's concerns regarding Mease's compliance with Section 381.705(1)(f) and (h), Florida Statutes, relate to the necessity and utilization of additional special equipment for cardiac cath at Mease and the ability of Mease to provide appropriate personnel to maintain the proposed project. While necessity or need for cardiac cath lab equipment at Mease may be a Morton Plant concern, the fact remains that the outpatient lab at Mease exists in accordance with the deregulation of those cardiac cath labs. It is a moot point to consider the advisability of the acquisition of that equipment at this time on any basis. Likewise, Morton Plant's concern regarding the recruitment of personnel by Mease upon available manpower is misplaced in view of the finding that Mease's application adequately provides for personnel, salaries, and other related costs.

     
     

     Section 381.705(1)(i), Florida Statutes

     
     

135. Both of the applications meet the requirement of Section 381.705(1)(i), Florida Statutes, that the projects be financially feasible in the immediate and long term. HRS stipulated to Mease's satisfaction of this criteria, as well as Palms' satisfaction of the requirement in the event that costs associated with the position of cardiac cath lab director in the Palms' proposal did not increase costs. Palms' compliance with the criteria is provided by the finding that the directorship of the proposed inpatient cath lab will be a nonpaying position.

     Section 381.705(1)(1), Florida Statutes

     
     

136. Section 381.705(1)(1), Florida Statutes, requires evaluation of the applications in the context of:

     
     

     The probable impact of the proposed project on the costs of providing health services proposed by the applicant, upon consideration of factors including, but not limited to, the effects of competition on the supply of health services being proposed and the improvements or innovations in the financing and delivery of health services which foster competition and service to promote quality assurance and cost-effectiveness.

     
     

     No direct evidence was presented at the final hearing regarding any adverse impact upon existing providers as a result of approval of Palms' application.

     The Palms' application, if granted, will result in a savings to inpatients and the hospital. Mease's charges are more reasonable than those of Palms, but approval of Mease's application would have the effect of duplicating services with the same patient population as Morton Plant with a resultant loss of revenue to Morton Plant.

     
     

     Section 381.705(1)(n), Florida Statutes

     
     

137. While the parties dispute the compliance of each other with Section 381.705(1)(n), Florida Statutes, regarding the applicants' past and proposed provision of health care services to Medicaid and medically indigent patients, HRS stipulated that both projects satisfied this criterion and such stipulation is supported by the evidence adduced at the final hearing.

     
     

     Not Normal Circumstances

     
     

138. One of the Petitioners' arguments is that both applications are susceptible of approval due to not normal and exceptional circumstances resulting from the alleged inaccurate projection of need in the service district by HRS as the result of usage of an erroneous data base, but HRS policy makes no provision for Petitioners' "conversion" theories. Also, there is insufficient evidence to determine that those proposed conversion factors provide a resultant adequate measure of resource utilization.

     
     

139. Evidence of extenuating and not normal circumstances is, however, demonstrated by the Palms' application due to access difficulties proven at hearing, and the proof that those difficulties will compound, rather than diminish, in the future. The need for this cardiac cath lab is further exacerbated by the tourist or winter season in the Palms area which places increased demands upon the existing cath labs at All Children's, the closest alternative treatment facility. See, Sarasota Countv Public Hospital Board d/b/a Memorial Hospital v. Dept. of HRS, 10 FALR 6119 (Final Order issued October 24, 1988).

     
     

140. The criteria set forth in Section 381.705(2)(a),(b) and (d), Florida Statutes, are cumulative to the criteria discussed above and are therefore not readdressed.

141. Balanced consideration of statutory and rule criteria lead to the conclusion that Mease's application should be denied in the absence of a showing of need or not normal circumstances. Palms' application should be approved on the basis of the not normal circumstances associated with the access difficulties presented at the final hearing.

RECOMMENDATION

Based on the foregoing, it is hereby

RECOMMENDED that a Final Order be entered approving the application of Palms for an inpatient cardiac catheterization lab or program Certificate of Need, and denying the application of Mease.

DONE AND ENTERED this 22nd day of March, 1990, 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 22nd day of March, 1990.

APPENDIX

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

Mease's Proposed Findings.

1.-3. Adopted in substance.

4. Rejected as to cost, not supported by weight of the evidence.

5.-15. Adopted in substance.

16. Rejected, conclusion of law. 17.-20. Rejected, cumulative.

21.-25. Rejected, unnecessary.

26.-31. Adopted in substance, but qualified in some instances.

1. Rejected, unnecessary.

2. Adopted in substance.

3. Rejected, unnecessary.

4. Rejected, misrepresentative of HRS policy interpretation of "procedures" in the context of rule application.

5. Rejected, not supported by the weight of the evidence.

37.-38. Adopted in substance.

39. Adopted.

40.-41. Rejected, not supported by weight of the evidence. 42.-43. Rejected, unnecessary.

44.-45. Rejected, not supported by weight of the evidence.

1. Adopted.

2. Rejected, not supported by weight of the evidence. 48.-51. Rejected, cumulative.

52.-58. Adopted by reference.

1. Rejected, relevancy.

2. Rejected as recitation of testimony, alternatively ultimate conclusion not supported by weight of the evidence.

3. Adopted by reference.

4. Rejected, relevancy.

63.-65. Adopted.

1. Rejected, speculative.

2. Adopted by reference.

3. Rejected, not supported by weight of the evidence.

4. Rejected, cumulative. 70.-72. Adopted in substance.

1. Rejected, cumulative.

2. Adopted in substance.

76. Rejected on basis of creditability. 77.-78. Adopted.

79.-81. Adopted in substance. 82.-84. Rejected, cumulative.

85.-86. Rejected, not supported by weight of the evidence. 87.-88. Adopted by reference.

89. Rejected, cumulative and speculative. 90.-91. Adopted in substance.

92. Rejected, not supported by weight of the evidence. 93.-94. Adopted in substance.

95.-97. Rejected, not supported by weight of the evidence. 98.-99. Adopted by reference.

100. Rejected, unnecessary. 101.-103. Adopted in substance.

104.-110. Rejected, not supported by weight of the evidence.

111. Adopted in substance.

112.-114. Rejected, not supported by weight of the evidence. 115.-116. Rejected on basis of creditability.

117.-122. Adopted by reference.

1. Rejected, not supported by weight of the evidence.

2. Adopted in substance.

3. Rejected on basis of creditability. 126.-128. Rejected, cumulative.

129. Rejected, not supported by weight of the evidence. 130.-131. Adopted in substance.

Palms' Proposed Findings.

1.-10. Adopted in substance.

11. Rejected, unnecessary. 12.-25. Adopted in substance.

26. Rejected, unnecessary. 27.-41. Adopted in substance.

42. Rejected, not supported by the evidence. 43.-45. Adopted in substance.

46. Rejected, unnecessary.

47.-57. Adopted in substance, though not verbatim.

58. Rejected, conjecture unsupported by weight of the evidence.

59.-63. Adopted in substance.

64. Rejected, unnecessary. 65.-71. Adopted in substance. 72.-75. Rejected, unnecessary.

76. Adopted as to first sentence. Rejected as to second sentence as unsupported legal conclusion.

77.-79. Adopted in substance.

1. Rejected, not supported by weight of the evidence.

2. Adopted for recitation of factual background in recommended order. However, the term "procedure" refers to ICD-9 procedures and not to "procedures" as that term has been defined by agency policy for need formula calculation. Proposed finding's conclusion of additional lab numeric need is rejected as not supported by weight of the evidence.

82.-88. Adopted in substance, though not verbatim. 89.-92. Rejected, unnecessary.

93.-94. Rejected, unsupported by weight of the evidence. 95.-101. Rejected, unnecessary.

102. Rejected, not supported by weight of the evidence. 103.-105. Rejected as legal argument and conclusions

unsupported by weight of the evidence to advance the theory that ICD- 9 procedures should govern over the agency's policy definition of procedures under the old rule, and that such other definition should control the determination of number of admissions used to calculate numeric need under the new rule.

1. Rejected, unnecessary.

2. First sentence adopted in substance, remainder of this proposed finding is rejected as argumentative legal conclusion not supported by weight of the evidence to the extent that subsection h data must be included in numeric need formula calculations.

3. Rejected as to ultimate conclusion of this proposed finding as unsupported by weight of the evidence.

109.-114. Adopted in substance. 115.-117. Adopted by reference.

118.-119. Rejected, not supported by weight of the evidence. 120.-125. Adopted in substance.

126. Rejected, unnecessary. 127.-130. Adopted in substance.

131. Rejected, not supported by weight of the evidence. 132.-137. Adopted in substance, though not verbatim.

Morton Plant's Proposed Findings.

1.-5. Adopted in substance.

1. Adopted in substance with exception of last sentence which is not supported by weight of the evidence.

2. Adopted by reference.

3. Rejected as to ultimate conclusion as unsupported by the weight of the evidence.

9.-11. Adopted in substance. 12.-15. Adopted in substance. 16.-18. Rejected, unnecessary.

1. First sentence reject, unsupported by evidence as to Palms. Adopted by reference as to remainder of this proposed finding.

2. Adopted in substance.

3. Rejected, unnecessary.

4. Adopted in substance.

5. Rejected, unnecessary.

6. Rejected, except as to last sentence which is adopted in substance.

7. Adopted by reference. 26-28. Adopted in substance.

29. Adopted in substance with exception of next to last sentence of this proposed finding which is rejected as unsupported by weight of the evidence.

30.-34. Adopted in substance.

1. First sentence rejected as unsupported by the weight of the evidence. Remainder of this proposed finding is rejected as unnecessary.

2. Rejected as unnecessary. 37.-38. Adopted in substance. 39.-40. Rejected, unnecessary.

1. Ultimate conclusion of this proposed finding regarding accessibility of cardiac cath services to Mease inpatients is adopted in substance. This proposed finding is apparently directed only to the Mease application in view of the usage of the singular in the reference to denial of the "application" and as such the remainder is rejected as unnecessary.

2. Adopted in substance.

3. All aspects of this proposed finding are not supported by the weight of the evidence. Therefore, as a multiple proposed finding not susceptible to division, it is rejected for that reason.

4. Adopted in substance.

5. Rejected, not supported by the weight of the evidence.

6. Rejected, not supported by the weight of the evidence.

47.-48. Rejected as unnecessary with exception of last sentence of proposed finding number 48 which is rejected as unsupported by the weight of the evidence.

49.-50. Rejected, not supported by the weight of the evidence.

51. Adopted in substance.

52.-56. Rejected, legal argument.

57. Adopted in substance.

HRS' proposed findings.

1. Adopted in substance, as to patients requiring angioplasty.

2. Rejected, unnecessary.

3. Rejected, not supported by weight of the evidence.

4. Adopted in substance.

5. Rejected, unnecessary.

6. Adopted in substance. 7.-10. Adopted in substance.

11. Rejected, unnecessary. 12.-13. Adopted by reference.

1. Rejected as unnecessary.

2. First sentence adopted in substance, remainder rejected as speculative, not supported by weight of the evidence.

3. Rejected, not supported by weight of the evidence.

4. Adopted by reference.

5. Adopted in substance. 19.-21. Adopted in substance. 22.-23. Rejected, unnecessary.

24.-25. Adopted in substance with exception of last sentence of proposed finding number 25 which is not supported by the weight of the evidence.

26.-27. Rejected, unnecessary.

28. Adopted by reference. 29.-30. Adopted in substance.

1. Adopted in substance.

2. Last sentence rejected as unsupported by the weight of the evidence.

3. Adopted by reference.

34.-35. Adopted.

1. Rejected, not supported by weight of the evidence.

2. Adopted in substance.

3. Not supported by the weight of the evidence. 39.-45. Adopted in substance.

1. Rejected, unnecessary.

2. Adopted in substance except as to last sentence which is rejected as unnecessary.

3. Adopted.

49.-53. Rejected as unnecessary.

54. Adopted.

55.-56. Rejected, unnecessary. 57.-58. Adopted in substance.

59. Rejected, unnecessary. 60.-61. Adopted in substance.

62. Rejected, unnecessary. 63.-67. Adopted in substance. 68.-72. Rejected, unnecessary. 73.-77. Adopted in substance. 78.-79. Rejected as unnecessary.

80.-81. Rejected as legal conclusions.

82. Rejected as unnecessary.

83.-87. Rejected, legal conclusions and argument.

88.-89. Adopted in substance. 90.-92. Rejected, unnecessary.

1. Adopted in substance.

2. Rejected, unnecessary.

3. Adopted in substance. 96.-98. Adopted by reference.

99. Rejected, unnecessary. 100.-101. Adopted in substance.

1. Rejected, recitation of testimony.

2. Rejected as to Palms, not supported by weight of the evidence. As to Mease, existing inpatient providers provide an alternative.

104.-105. Rejected, not supported by the weight of the evidence.

106. Rejected as cumulative. 107.-108. Rejected as unnecessary.

1. Adopted by reference.

2. Rejected, legal argument.

3. Adopted in substance.

4. Adopted by reference.

113.-114. Adopted in substance with modification.

115. Adopted in substance.

COPIES FURNISHED:

Edgar Lee Elzie, Jr., Esq.

215 South Monroe Street, Suite 804 Tallahassee, FL 32301

C. Gary Williams, Esq. Stephen C. Emmanuel, Esq.

227 South Calhoun St.

P.O. Box 391 Tallahassee, FL 32302

Ken Hoffman, Esq.

W. David Watkins, Esq.

P.O. Box 6507

Tallahassee, FL 32314-6507

Cynthia S. Tunnicliff, Esq. Loula Fuller, Esq.

P.O. Drawer 190 Tallahassee, FL 32302

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

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

AGENCY FINAL ORDER

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

STATE OF FLORIDA

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

NME HOSPITALS, INC. d/b/a PALMS OF PASADENA HOSPITAL,

Petitioner,

CASE NO.: 89-1425

vs. CON NO.: 5681

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

Respondent.

/ MEASE HEALTH CARE, INC.,

Petitioner,

CASE NO.: 89-1426

vs. CON NO.: 5680

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

Respondent,

and

MORTON F. PLANT HOSPITAL, INC.,

Intervenor.

/

FINAL ORDER

This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above-styled case submitted a Recommended Order to the Department of Health and Rehabilitative Services (HRS). A copy of that Recommended Order is attached hereto.

RULING ON EXCEPTIONS FILED BY THE DEPARTMENT

Counsel excepts to the conclusions (and findings which support the conclusion) that the pre-April 22, 1988, version of the numeric need rule (old rule) remains in effect and thus must be applied in this case. The exceptions are granted and the Hearing Officer's conclusion is rejected. The version of Section 10-5.011(1)(e), F. A. C., (new rule) published in the July 29, 1988, edition of the Florida Administrative Weekly is in effect and applicable to this case. The department's position is set forth in detail in Nu-Med Pembroke, Inc. vs. Department of Health and Rehabilitative Services, Case Number 89-1255 (HRS 2/23/90).

RULING ON EXCEPTIONS FILED BY MEASE

Mease excepts in whole or in part to findings of fact 8, 37, 43, 51, 62,

63, 64, 66, 68, 71, 72, 77, 78, 88, 90, 92, 93, 94, 98, 102, 103, 105, 106, 109,

110, 111, 113, 117, 118, 119, and 122. The challenged findings are supported by competent, substantial evidence; therefore, the exceptions are denied. Heifetz vs. Department of Business Regulation, 475 So2d 1277 at 1281 (Fla. 1st DCA 1985). In its exceptions to the conclusions of law Mease reiterates its contention that not only does the "old" numeric need rule govern, but that there is numeric need for both the Mease and Palm's proposals. The exceptions are denied for the reasons given by the Hearing Officer. The other exceptions to the conclusions of law are also denied.

FINDINGS OF FACT

The Department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order except where inconsistent with the rulings on the exceptions.

CONCLUSIONS OF LAW

The Department hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order except where inconsistent with the rulings on the exceptions.

Based upon the foregoing, it is

ADJUDGED, that the application of Palms of Pasadena Hospital for CON 5681 be APPROVED; it is further adjudged that the application of Mease Health Care for CON 5680 be DENIED.

DONE and ORDERED this 23rd day of April, 1990, in Tallahassee, Florida.

Gregory L. Coler Secretary

Department of Health and Rehabilitative Services

by Deputy Secretary for Programs

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF HRS, AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED

Copies furnished to:

C. Gary Williams, Esquire Cynthia S. Tunnicliff, Esquire Stephen C. Emmanuel, Esquire Loula Fuller, Esquire

227 South Calhoun Street 215 S. Monroe Street, Ste 410 Post Office Box 391 Post Office Drawer 190

Tallahassee, FL 32302 Tallahassee, FL 32302

Kenneth F. Hoffman, Esquire Don W. Davis

W. David Watkins, Esquire Hearing Officer

OERTEL, HOFFMAN, FERNANDEZ, & DOAH, The DeSoto Building

COLE, P.A. 1230 Apalachee Parkway

P. O. Box 6507 Tallahassee, FL 32399-1550 Tallahassee, FL 32314-6507

Lee Elzie, Esquire FALR

MACFARLANE, FERGUSON, ALLISON Post Office Box 385

& KELLY Gainesville, FL 32602

215 S. Monroe Street, Ste 804

Post Office Box 82 Wayne McDaniel (PDDR) First Florida Bank Bldg.

Tallahassee, FL 32302 Susan Lincicome (PDRH)

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a copy of the foregoing was sent to the above-named people by U.S. Mail this 27 day of Apr 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

Docket for Case No: 89-001425

Orders for Case No: 89-001425