STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SOUTH BROWARD HOSPITAL DISTRICT ) d/b/a MEMORIAL HOSPITAL WEST, )

)

Petitioner, )

)

vs. ) CASE NO. 93-4881

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent, )

and )

) PLANTATION GENERAL HOSPITAL, L.P., )

)

Intervenor. )

)

RECOMMENDED ORDER

This case was heard on August 9-10, 1994, in Tallahassee, Florida. The hearing was held before James W. York, designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: R. Terry Rigsby, Esquire

BLANK, RIGSBY & MEENAN, P.A.

204 South Monroe Street Tallahassee, Florida 32301

For Respondent: Dean Bunton, Esquire

Agency for Health Care Administration The Atrium, Suite 301

325 John Knox Road

Tallahassee, Florida 32303-4131

For Intervenor: Jay Adams, Esquire

215 South Monroe Street, Suite 400 Tallahassee, Florida 32301

STATEMENT OF THE ISSUES

At issue in this proceeding is whether Memorial West should be issued CON 7249 to establish a 10-bed Level II NICU program at its facility in southwest Broward County based on "not normal circumstances." Also at issue is whether the Intervenor, Plantation General Hospital, L.P., has sufficiently demonstrated standing, based on whether its existing NICU service will be substantially adversely affected if Memorial West's proposed project is approved.

PRELIMINARY STATEMENT

On February 5, 1993, the Agency for Health Care Administration (AHCA) published in the Florida Administrative Weekly, Volume 19, No. 5, a "fixed need pool" of zero for Level II Neonatal Intensive Care Unit (NICU) beds in District

10 for the March 1993 batching cycle. District 10 consists of Broward County. Thereafter, the South Broward Hospital district, d/b/a Memorial Hospital West (Memorial West), timely filed its letter of intent and a Certificate of Need (CON) application to establish a 10-bed NICU Level II unit at Memorial West's facility in southwest Broward County. The CON application thereafter was assigned CON Action No. 7249. A competing CON application was submitted for comparative review by Galen of Florida, Inc., d/b/a Westside Regional Medical Center (Galen), and was subsequently assigned CON Action No. 7248. On June 10, 1993, AHCA issued a State Agency Action Report (SAAR), advising Memorial West of its intent to preliminarily deny the CON applications of both Memorial West and Galen. Memorial West filed a timely petition to challenge AHCA's decision, which was assigned DOAH Case No. 93-4881. Thereafter, Plantation General Hospital, L.P. (Plantation), filed a timely petition to intervene in DOAH Case No. 93-4881. Memorial West responded in opposition to Plantation's petition, denying that Memorial West's proposed project would substantially adversely affect Plantation's existing NICU services. Plantation was granted leave to intervene. 1/

Prior to the final hearing, Memorial West filed a Motion for Summary Recommended Order Dismissing Plantation as a party, asserting that Plantation's expert witness had failed to formalize her expert opinion concerning opposition to Memorial West's application 40 days prior to the final hearing in this matter. Although Memorial West's Motion was denied, an order was entered providing that Ms. Lynne Mulder would be Plantation's sole expert witness at the hearing, and further limited her opinion testimony to those opinions formed as of her June 23, 1994 deposition.

At final hearing, Memorial West presented the testimony of Elton Scott, Ph.D., Lester McIntyre, M.D., tendered and accepted as an expert in Pediatrics and Neonatology and Kathryn Blanton, tendered and accepted as an expert in managing children's health care services. Memorial West also entered into evidence Exhibits 1-12, which included the deposition testimony of Edward Zelnick, M.D. and Miguel Venereo, M.D. 2/

AHCA presented the testimony of Morgan Riley Gibson, a Certificate of Need consultant with AHCA's Certificate of Need Office, tendered and accepted as an expert in Health Planning and the CON review process. AHCA also entered into evidence exhibits 1-8.

Plantation presented the testimony of Lynne Mulder, tendered and accepted as an expert in health planning. No exhibits were introduced by Plantation.

Parties were afforded the opportunity to file proposed findings of fact in this case. These findings were submitted on November 4, 1994. Each of the proposed findings (including those submitted by Plantation) were considered and rulings on each finding is contained in the Appendix attached to and made a part of this Recommended Order.

FINDINGS OF FACT BACKGROUND

1. The South Broward Hospital District (SBHD) is a public agency that provides health care services to the residents of the South Broward Hospital District, without regard of ability to pay. SBHD is a special taxing district, created by the Florida Legislature in 1947.

   
   

2. SBHD operates two hospitals within the District; Memorial Hospital at Hollywood (Memorial Hospital), with 646 licensed beds, and Memorial West, a 100- bed acute care hospital located in Pembroke Pines, which commenced operations in May 1992, and serves the southwestern region of Broward County. Memorial West's

   100 licensed acute bed capacity consists of 72 medical/surgical beds, 16 intensive care unit beds, and 12 maternity, labor, delivery, recovery and postpartum (LDRP) rooms.

   
   

3. SBHD located Memorial West in southwest Broward County to provide services to the residents of that part of the county, which is the most rapidly growing area in Broward County.

   
   

4. SBHD has existing outpatient services and educational programs which are funded through state and public support and enable the District to provide continuity of care to its patients. SBHD's facilities are supported by ad valorem taxes imposed on the citizens or residents within the South Broward Hospital District.

   
   

5. In the most recent survey of Memorial Hospital, the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) granted a 3-year accreditation with commendation. Memorial West, open since 1992, is in the process of qualifying for JCAHO Accreditation.

   
   

6. There are presently six providers of NICU services in Broward County: Memorial Hospital has 10 Level II NICU beds and 19 Level III NICU beds; Plantation General Hospital has 13 Level II NICU beds and 19 Level III NICU beds; Broward General Medical Center has 36 Level II beds and 27 Level III beds; Holy Cross Hospital has 9 Level II NICU beds; Northwest Regional Medical Center has 6 Level II NICU beds; and Coral Springs has 8 existing and 2 approved but not yet operational Level II NICU beds.

   
   

7. The nearest provider of NICU services to Memorial West is its sister hospital, Memorial Hospital. It is located approximately nine miles to the east of Memorial West. Typical drive time between these hospitals is 25 to 30 minutes, although it could be as little as 10 minutes or as much as an hour depending on traffic. The next nearest provider of NICU services to Memorial West is Plantation north and slightly east of Memorial West. Typical drive time between Memorial West and Plantation is 35 to 45 minutes. Farther to the east and not as far north is Broward General Medical Center. Typical travel from Memorial West to Broward General is 45 minutes to one hour.

   
   

   STIPULATED STATUTORY AND ADMINISTRATIVE RULE CRITERIA

   
   

8. On August 1, 1994, the parties filed a Joint Prehearing Stipulation, agreeing that the CON review criteria and standards applicable in this proceeding were set forth in Sections 408.035(1) and (2), Florida Statutes, and Rule 59C-1.042, Florida Administrative Code. The parties further acknowledged

   that Memorial West had fully met certain statutory and administrative rule criteria applicable to this proceeding; other such criteria were deemed not at issue to this proceeding:

   
   

   STATUTORY CRITERIA DEEMED MET IN FULL OR NOT AT ISSUE

   Section 408.035(1)(c), Florida Statutes; Section 408.035(1)(e), Florida Statutes; Section 408.035(1)(f), Florida Statutes; Section 408.035(1)(g), Florida Statutes; Section 408.035(1)(j), Florida Statutes; Section 408.035(1)(k), Florida Statutes; Section 408.035(1)(m), Florida Statutes;

   Section 408.035(1)(o), Florida Statutes; 3/ and Section 408.035(2)(e), Florida Statutes.

   
   

   ADMINISTRATIVE RULE CRITERIA DEEMED MET OR NOT AT ISSUE

   Rule 59C-1.042(3)(e), Florida Administrative Code; Rule 59C-1.042(3)(f), Florida Administrative Code; Rule 59C-1.042(3)(g), Florida Administrative Code; Rule 59C-1.042(3)(i), Florida Administrative Code; Rule 59C-1.042(4), Florida Administrative Code; Rule 59C-1.042(5), Florida Administrative Code; Rule 59C-1.042(7), Florida Administrative Code; Rule 59C-1.042(8), Florida Administrative Code; Rule 59C-1.042(9), Florida Administrative Code; Rule 59C-1.042(10), Florida Administrative Code; Rule 59C-1.042(11), Florida Administrative Code; Rule 59C-1.042(12), Florida Administrative Code; Rule 59C-1.042(13), Florida Administrative Code; Rule 59C-1.042(14), Florida Administrative Code;

   Rule 59C-1.042(15), Florida Administrative Code; and Rule 59C-1.042(16), Florida Administrative Code.

   
   

9. The parties further stipulated that the following statutory and administrative rule criteria had been met, in part, by Memorial West's CON application:

   
   

   Section 408.035(1)(a), Florida Statutes, and Rule 59C-1.042(3)(h), Florida Administrative Code, as to Local Health Plan Recommendations

   2, 3, and 4; and State Health Plan Preference 3;

   
   

   Section 408.035(1)(h), Florida Statutes, as to the availability of resources including health manpower, management personnel and funds for capital and operating expenditures for project accomplishment and operation, the effects and accessibility of the project on health training programs in the service district, and the access- ibility of the project to all residents in the service district;

   
   

   Section 408.035(1)(i), Florida Statutes, as to the immediate financial feasibility of the proposed project; and

   Section 408.035(1)(l), Florida Statutes, as to the probable impact of the proposed project on the cost of providing health services in the district, except as to the alleged impact on Plantation.

   
   

   NEED DETERMINATION/NOT NORMAL CIRCUMSTANCES

   
   

10. Memorial West seeks approval of its CON application to establish a 10 bed Level II NICU program on the basis of "not normal circumstances" that exist in District 10. Petitioner does not challenge the need methodology pursuant to Rule 59C-1.042(3) (a-c), Florida Administrative Code. Likewise, Petitioner does not challenge the AHCA determination of a fixed need pool of zero for Level II Neonatal Intensive Care Unit (NICU) beds in District 10 for the July 1995 planning horizon.

    
    

11. The AHCA projection publication of January 1993 projected bed need for

    61 Level II NICU beds for the July 1995 planning horizon and also indicates that there are 77 authorized CON approved beds. Based upon these figures, the AHCA projection publication indicates an overbedding within the District of 16 beds for the planning horizon. The agency has also approved an additional 4 Level II NICU beds for Holy Cross Hospital.

    
    

12. Rule 59C-1.042(3)(d) of the Florida Administrative Code provides, in pertinent part:

    
    

    [r]egardless of whether bed need is shown under the need formula...the establishment of new level II [NICU]...beds within a district shall not normally be approved unless the average occupancy rate for Level II beds in the district equals or exceeds 80 percent for the most recent

    12 month period ending 6 months prior to the beginning date of the quarter of the publication of the fixed bed need pool.

    
    

13. AHCA bed utilization figures indicate that occupancy rates for Level II beds in the district for the applicable time period was 62.55 percent. These figures are based upon an assumption of 77 operational Level II NICU beds.

    
    

    Not Normal Circumstances

    
    

    1. Occupancy Rates

       
       

14. Petitioner has established that, from 1989 to at least 1993, Broward General Hospital has reported that 16 of its 36 licensed Level II NICU beds are not in service. AHCA's district occupancy rates do not reflect what amounts to over 20 percent of licensed Level II NICU beds that are and have been out of service for the relevant time period. Based upon these facts, the actual occupancy rates for the district were very close to 80 percent in 1992.

    
    

15. The 16 NICU beds at Broward General Hospital were out of service from 1989-1993 due to a shortage of available qualified nurses. Testimony provided by Petitioner's health care management expert established that the shortage of qualified nurses no longer exists in the district. There is no evidence, however, to establish that any or all such beds are currently in service.

16. Petitioner also established that AHCA has traditionally considered north and south Broward Counties as two separate and distinct medical markets with relatively little overlap in between. Existing Level II NICU beds in the South Broward Hospital District have consistently experienced occupancy rates approaching or exceeding 100 percent.

    
    

17. Petitioner Memorial West has thus demonstrated substantial compliance with the Rule criteria of 80 percent occupancy rate in the district for the relevant time period.

    
    

18. As an additional "not normal circumstance," Petitioner established that Memorial West has experienced a significant increase in the volume of neonatal deliveries. Based upon the continuing increase in births at Memorial West, Petitioner has established that its reasonable annualized figures indicate that 2,400 to 2,500 live births can be expected to occur at Memorial West per year.

    
    

19. At the close of 1993, every hospital in the state of Florida that was experiencing 2,500 deliveries had an existing or approved Level II or Level III NICU program.

    
    

20. Although there is evidence that there is no health planning standard or guideline suggesting that a hospital should operate NICU services when it reaches any particular level of live birth rates, the AHCA's own CON consultant testified that the current level of births occurring at Memorial West should be an extenuating circumstance in determining whether to approve the CON application at issue.

    
    

    B. Accessibility of NICU Services

    
    

21. The physicians and obstetricians of Memorial West have developed a "triage" system in an attempt to identify, prior to delivery, those patients who might require NICU services and to divert such patients or very premature deliveries to other NICU providers where the physicians have staff privileges.

    
    

22. The triage system cannot, however, detect all potential delivery problems. In calendar year 1993, 28 newborns delivered at Memorial West required transfers to Memorial Hospital for NICU care and in the three months prior to the hearing in this case, an additional 17 such newborn transfers were required.

    
    

23. Petitioner established that there are medical risks associated with operating an obstetrical unit with the volume of deliveries experienced by Memorial West where no on-site Level II NICU services are provided.

    
    

24. By not providing Level II services at Memorial West, a considerable number of babies are subject to transfers with a risk of poorer outcomes than if those babies remained at Memorial West for continued care.

    
    

25. There is, however, no evidence that any neonate has in fact suffered an adverse change in condition as a result of being transferred anywhere in District 10.

    
    

26. The testimony at final hearing in this case established that the medical services distinction between the North and South Broward Hospital Districts applies to obstetrical services. There is little physician and patient overlap between the districts.

27. It is uncommon to have physicians on staff at hospitals in both the north and south portions of Broward County. Physicians practice patterns indicate that physicians stay, refer and admit patients to facilities near to where the physicians live and practice. The evidence at hearing established that, as a consequence, there is little medical services crossover between the northern and southern portions of District 10.

    
    

28. The testimony of Petitioner's medical expert at the final hearing established that, as a general proposition, obstetricians can provide a better quality of care if their practice is restricted to one or two hospitals that are fairly close to each other.

    
    

29. Obstetricians consider practice guidelines regarding travel time and emergency response time when deciding where to locate their offices and at which facilities they will seek staff privileges. Physicians with staff privileges at Memorial West or Memorial Hospital generally locate their offices within the South Broward Hospital District, and adhere to travel time and emergency response guidelines.

    
    

    Distribution of NICU Beds Within the District

    
    

30. Petitioner also established that approved Level II NICU beds are not evenly distributed throughout Broward County. Eighty-eight percent (88 percent) of the Level II NICU beds in District 10 are located in the North Broward Hospital District. These approved beds are distributed among five providers. Memorial Hospital is the only hospital providing NICU services in the South Broward Hospital District.

    
    

31. The disproportionate number of beds in the northern portion of District 10, and the fact that occupancy and utilization rates have not, in the past, reflected out of service beds has an impact on determination of need for additional Level II NICU beds in the South Broward Hospital District.

    
    

32. Dr. Scott projected that ten (10) additional Level II NICU beds are needed in the southern portion of District 10 for the applicable planning horizon, based on the projected number of births for women aged 15-44 years, the historic birth rate, and total females in that age category apportioned to the North Broward Hospital District and the South Broward Hospital District; he also broke out the southwest Broward area as a subset of the South Broward Hospital District as a whole. Using the above formula, Dr. Scott projects that the Level II NICU bed days in District 10 per 1,000 births will be 965; resulting in a projection of 2,795 bed days in southwest Broward County--which supports the need for an additional 10 Level II NICU beds in the southwest Broward area. Dr. Scott's testimony in this regard was not refuted and is accepted.

    
    

33. It is clear from the record in this case that the absence of Level II NICU services at Memorial West results in less than optimum conditions and in inefficient operations with respect to the provision of NICU services for babies delivered at Memorial West.

    
    

34. The current live birth rates experienced at Memorial West, the distribution of NICU services within the district, the physician practice patterns in Broward County and medical risks attendant to transfer of newborns in need of NICU are all relevant extenuating circumstances in support of Petitioner's application in this case.

35. Rule 59C-1.042, F.A.C., is the agency's long-standing rule providing that NICU services be available within two hours' ground travel time under normal circumstances for 90 percent of the district population. Petitioner has not challenged this rule and the evidence in this proceeding establishes that NICU beds in District 10 are available to all residents within the two hour timeframe.

    
    

    REMAINING STATUTORY AND RULE CRITERIA AT ISSUE

    
    

    Need in Relation to District and State Health Plans, Section 408.035(1)(a), F.S.,

    and Rule 59C-1.042(3)(h), F.A.C.

    
    

    1. District Health Plan Recommendations

       
       

36. The applicable (1989) District Health plan provides four recommendations to be used in evaluating CON applications for NICU services. By stipulation, the parties agreed that three of the four recommendations have been met or are not applicable to Petitioner's CON application. At issue is the following recommendation:

    
    

    (a) Achieve and maintain an area wide occupancy rate of at least 75 percent for Level II and 85 percent for Level III providers of neonatal care in District 10.

    
    

37. Typically, most CON applications receiving agency approval do not meet all of the local health plan recommendations and are approved where such recommendations are partially met.

    
    

38. Petitioner established that approximately 20 percent of the licensed Level II NICU beds within District 10 were not in operation during relevant timeframes, thus not available when needed. If utilization data accurately reflected this circumstance, District 10 occupancy rates would meet the 75 percent threshold requirement for the 1989 District Health Plan.

    
    

39. During the overall applicable time period, actual Level II NICU occupancy significantly exceeded 75 percent for the South Broward District.

    
    

40. Petitioner established that the utilization data reported to the state by the local health council is based upon calculations which involve taking total admissions to Level III NICU programs and total admission to Level II units and dividing each number into the total patient days for each level. The resulting rate of occupancy does not accurately reflect total utilization of NICU beds. Memorial Hospital has both Level II and Level III beds. Most NICU admissions are to Level III. After a period of time, most babies admitted at Level III are transferred to Level II beds. The occupancy rates at issue here do not reflect any subsequent reclassification of Level III babies to Level II beds, thus, it is more likely than not that Level II utilization rates are actually higher than the rate reflected based upon local health council calculations.

    
    

41. Petitioner also presented testimony to the effect that the 75 percent occupancy rate standard should only apply to the southwest Broward County area. This testimony was not persuasive.

42. On balance, however, the greater weight of the evidence establishes that Petitioner's CON application is in substantial compliance with local health plan recommendations.

    
    

    B. State Health Plan Preferences

    
    

43. The State Agency Action Report indicates that, in this case, the following three preferences in the State Health Plan are applicable to the establishment of additional Level II NICU beds:

    
    

    1. Preference shall be given to an applicant who proposes to convert existing medical and surgical beds to neonatal intensive care unit beds;

    2. Preference shall be given to an applicant who proposes to provide neonatal intensive care services to Children's Medical Services (CMS) patients, Medicaid patients, and non-CMS who

       are defined as charity care patients; and

    3. Preference shall be given to applicants who propose to serve substance-abusing pregnant

    and postpartum women and coordinate their services with other appropriate social agencies.

    
    

44. By stipulation, the parties agree that only preferences (a) and (b) are at issue in this proceeding.

    
    

45. Memorial West does not propose to convert any existing medical or surgical beds to NICU beds and, therefore, does not meet this preference.

    
    

46. As to preference (b), while the application does not address charity care, Memorial West has demonstrated, and the agency acknowledges, that Petitioner is entitled to partial preference.

Section 408.035(1)(b), F.S. and Chapter 59C-1.030, F.A.C.

47. Section 408.035(1)(b), F.S., and Rule 59C-1.030, F.A.C., provide review criteria pertinent to Petitioner's CON application. This review criteria relates to the availability, quality of care, extent of utilization, and adequacy of like and existing health care services and hospices in the service district.

1. Under Petitioner's current operating system, Memorial West transports newborns in need of NICU services to the closest NICU facility in order to minimize transport time. The closest Level II NICU provider is Memorial Hospital. Petitioner has established that Level II beds at Memorial Hospital are not always available due to occupancy rates at that specific facility.

   
   

2. When the total occupancy of the Memorial Hospital NICU facilities reaches 100 percent, the hospital does not refuse admissions or transfer babies elsewhere. Under these conditions, Memorial Hospital establishes overflow areas in Memorial Hospital's newborn nursery and treats all presenting neonates.

   
   

3. There is no evidence in the record to indicate that the current method of using Level III NICU beds to accommodate Level II patients at Memorial detracts from the quality of service provided.

4. Practice guidelines of the American College of Obstetricians and Gynecologists recommend that a physician be able to respond within 30 minutes in an emergency situation.

   
   

5. Because most physicians limit their practice such that they are able to provide a 30 minute emergency response time from their office, or other hospitals, physicians practicing at Memorial West or at an office in that immediate area, would not be able to adequately respond to an emergency in a hospital in the North Broward District, including Plantation General Hospital.

   
   

6. The weight of the evidence in this proceeding establishes that Level II NICU services are available to Memorial West newborns at other hospitals within the service district. These facilities are within the two hour ground transport time established by the agency's long standing rule. However, these available NICU beds are located primarily in northern Broward County and, due to physician practice patterns recognized by the agency, are not easily accessible or readily available to Memorial West patients.

   
   

   Section 408.035(1)(d), F.S.

   
   

7. Section 408.035(1)(d), F.S., provides, as part of the review criteria applicable to CON applications, consideration of "the availability and adequacy of other health care facilities and services and hospices in the service district of the applicant, such as outpatient care and ambulatory home services, which may serve as alternatives for the health care facilities and services to be provided by the applicant." This criteria is not applicable to newborns in need of intensive care, and is therefore not applicable here.

   
   

   Section 408.035(1)(h), F.S.

   
   

8. The Section 408.035(1)(h), F.S., review criteria applicable in this proceeding involve "the availability of alternative uses of ... resources for the provision of other health services."

   
   

9. Since opening in 1992, Memorial West has experienced a steady, significant increase in the number of deliveries performed in its obstetrical unit. As discussed above, the number of deliveries at Memorial West increased by more than 1,000 from 1992 to 1993, and currently Memorial West is projecting approximately 2,400-2,500 live births in its current fiscal year. Memorial West reasonably anticipates that the number of deliveries at Memorial West will continue to increase as the population in the south Broward County area continues to grow. Thus, SBHD has deemed it a priority to expand the obstetrical program at Memorial West, and to establish a Level II NICU program at the southwest Broward facility to provide services to the residents of that area. Memorial West has already undertaken to expand its existing obstetrics unit by adding twelve Labor, Delivery, Recovery and Postpartum (LDRP) beds.

   
   

10. Statistically, between 5-12 percent of babies require NICU care. Based on the demographics of the population in southwest Broward County, it is reasonable to project that approximately 8 percent of newborns delivered at

    Memorial West will require neonatal intensive care. Despite the best efforts by physicians and obstetricians to identify potential high risk patients and divert those patients to other NICU providers where the physician and obstetrician has staff privileges, it is inevitable that Memorial West will still deliver a significant number of babies who will require unpredicted Level II NICU care.

11. SBHD had considered expanding the number of Level II NICU beds at Memorial Hospital, but determined that was not a feasible alternative. The existing unit at Memorial Hospital cannot be expanded to accommodate additional Level II NICU beds in its present location, and would have to be relocated elsewhere in the facility. After considering the alternatives, and in light to the commitment to expanding obstetrical services to the residents of southwest Broward County, SBHD reasonably concluded that the most cost-effective alternative and the best use of its resources was to establish a 10-bed NICU program at Memorial West to meet the increasing need for NICU care in that area.

    
    

    Section 408.035(1)(i), F.S.

    
    

12. Section 408.035(1)(i), F.S., is applicable to this case in terms of "[t]he immediate and long-term financial feasibility of the proposal."

    
    

    Average Length of Stay

    
    

13. Memorial West's projected ALOS appears reasonable, as it is based on the actual experience of hospitals in Dade and Broward counties that offer Level II NICU services. The expert testimony presented at the final hearing consistently supports Petitioner's position that the 14 day projected ALOS in the CON application is reasonable.

    
    

14. For its review of Memorial West's CON application, the agency did not consider any of the available data concerning ALOS in District 10, or the actual experience of Level II providers in the district. Instead, the agency relied solely on "data collected by the agency in the context of rule development [that] indicates an average length of stay of 10 or more days for Level III services," and not Level II data.

    
    

15. The testimony of the agency's CON consultant indicates that if the district ALOS was 15 days at the time Memorial West filed its CON application, and the ALOS at the Memorial Hospital (Hollywood) Level II NICU unit was 14 days, then the 14 day projection would be reasonable.

    
    

16. Thus, the greater weight of the evidence establishes that the ALOS of

    14 days projected in Memorial West's application is reasonable.

    
    

    Utilization

    
    

17. Memorial West projected 56 percent occupancy of the Level II NICU beds during its first year of operation. AHCA determined that the projected utilization was not reasonable based on the occupancy rates reported by the District 10 local health council during the applicable time period.

    
    

18. Although the published utilization or occupancy rates in District 10 showed an overall occupancy rate of approximately 62 percent during the applicable reporting period, there is sufficient evidence to show that the utilization data reported to AHCA by the local health council did not reflect ac tual occupancy in Level II NICU beds.

    
    

19. As previously noted, where a hospital has both Level II and Level III beds, like Memorial Hospital and Plantation, most admissions are made to the Level III unit. At Memorial Hospital, approximately 90 percent of NICU admissions are to Level III. After a few days, many Level III babies are reclassified to Level II. Subsequent reclassification of a baby from Level III to Level II does not alter the original admission classification made upon

    admission to the unit. For example, if a baby remained in the NICU a total of twenty days, with three of those days at Level III and the remainder at Level II, the local health council calculations would show one Level III admission for twenty days.

    
    

20. NICU providers in District 10 supply the local health council with data regarding the number of patient days in Level II and Level III beds, along with the number of admissions for each level. The local health council determines occupancy rates by dividing the number of patient days in each unit by the number of admissions to each unit. This method of calculation somewhat skews the occupancy utilization rates where a facility has both Level II and Level III beds, overstating occupancy in Level III beds, and understating occupancy in Level II beds.

    
    

21. The reasonable means for determining occupancy is to review each patient record to determine the level of NICU services provided for each day spent in the neonatal intensive care unit. Based on Memorial Hospital's review of patient records, occupancy in its Level II NICU beds often exceeds 100 percent.

    
    

22. The agency's CON consultant concedes that if, as in this case, the neonatologist in charge of Memorial Hospital's neonatal intensive care unit and the person operating Memorial Hospital's NICU program testified that occupancy in Level II NICU beds exceeded 100 percent, the projected utilization in Memorial West's application would be reasonable.

    
    

23. The agency's witness also agreed that, assuming Memorial West can achieve the utilization shown in the pro forma, the proposed project would be financially feasible in the long term, which would be within the first two years of operation.

    
    

24. Memorial West can reasonably expect that approximately eight percent of the babies delivered in its obstetrical unit will require Level II NICU care. Given that Memorial West is currently experiencing more than 2,000 live births annually, which is almost the level that was projected in the CON need analysis for the 1995 planning horizon, Memorial West has demonstrated that its need analysis is reasonable and that it can achieve the projected utilization proposed in the CON application.

    
    

25. Under the circumstances, the evidence presented at the final hearing indicates Petitioner's proposed 10-bed Level II NICU program is financially feasible in the long term by documenting that it's projected average length of stay and utilization is reasonable.

    
    

    Section 408.035(1)(l), F.S.

    
    

26. The review criteria provided in Section 408.035(1)(l), F.S., involve a consideration of impact of the proposal on the supply of health services, competition, quality assurance, and cost effectiveness in the health care system. These factors are applicable in this case.

    
    

27. NICU Level II services are considered tertiary care services and are, by statute and agency rule, to be limited to a few providers due to the high quality of care required and the high costs of such care.

28. Based upon the evidence presented at final hearing, Petitioner has established that the overall District 10 Level II occupancy rates relied on by the agency are skewed for the purposes of resolving the issues in this proceeding. In addition, Petitioner in this case has established reasonable "not normal circumstances" which support the Memorial West application for Level II NICU beds despite overall occupancy rates in such units throughout Broward County.

    
    

29. The overlap in service area between Petitioner (in the South Broward Hospital District) and Intervenor Plantation General Hospital (located in the North Broward District) occurs primarily in Plantation's secondary service area.

    
    

30. In addition to Plantation, there are four other providers of Level II NICU services located in Northern Broward County. None of these providers intervened in these proceedings to challenge Petitioner's application to establish a 10-bed Level II NICU program.

    
    

31. Based upon the factors outlined above, the primary consideration of the applicable review criteria contained in Section 408.035(1)(l), F.S., in this proceeding involves the affect on quality assurance and cost effectiveness as well as competition between Petitioner Memorial West and the Intervenor, Plantation.

    
    

32. Plantation did not provide any evidence to support its claim that Plantation would lose NICU patients if Memorial West's proposed Level II NICU program were approved. Plantation did not attempt to quantify the purported losses, nor did it address any alleged financial impact.

    
    

33. At the time Memorial West submitted its CON application, there were a total of six (6) obstetricians on staff at both Memorial West and Plantation, but not at Memorial Hospital. These six physicians were responsible for 220 deliveries at Memorial West and 245 deliveries at Plantation. However, Plantation did not offer any evidence to establish that some or all of these obstetricians would divert patients to Memorial West if it established a NICU program.

    
    

34. Petitioner presented the expert testimony of Elton Scott, Ph.D. regarding the issue of the probable impact of its proposed project on Plantation. Dr. Scott first identified the Broward County zip codes in which there is some overlap between Memorial West and Plantation. A total of 524 obstetrical patients who delivered at Plantation originated in these zip codes. Next Dr. Scott examined the patient origin data for each of the six physicians with privileges at Plantation and Memorial West, isolating the deliveries for each physician originating in those same zip codes. Two of the six physicians had no deliveries from patients originating in those zip codes. The four remaining obstetricians were responsible for only 53 total deliveries at Plantation from patients originating in those zip codes. The other 471 deliveries originating from those zip codes were attributable to physicians who did not have staff privileges at Memorial West.

    
    

35. Out of approximately 3,000 births at Plantation, less than two percent were attributable to physicians with staff privileges at both Plantation and Memorial West. If those physicians continue to admit to Plantation, there would be no impact on Plantation's existing services. There was no evidence that any of these physicians would admit some, most, or all patients to Memorial West if the proposed 10-bed Level II NICU program is approved.

36. No evidence was presented to indicate whether any of these 53 babies delivered at Plantation required NICU care. Dr. Scott hypothesized that if approximately eight percent of patients from the overlapping zip codes required NICU services, and all of those NICU patients were diverted to Memorial West, it would only result in a loss of four (4) patients to Plantation. At most, Plantation could lose less than two percent of its NICU admissions to Memorial West, which does not suggest any significant impact on Plantation. Further, Plantation did not present any evidence to show that it will lose NICU patients if Memorial West's proposed project is approved.

    
    

37. Plantation did not refute Memorial West's data regarding potential patient loss, and did not offer any analysis to support or substantiate its assertion that Memorial West's proposed project assertions will have any adverse financial impact on Plantation's NICU program.

    
    

38. The number of deliveries at Plantation from 1992 to 1993 increased by

    252 over the prior year, at the same time that Memorial West was experiencing an increase of more than 1,000 deliveries over the previous year. There was evidence to show that from 1991 to 1992, Plantation had shown an increase of 50 deliveries. Westside Regional Medical Center, also located in the South Broward Hospital District, experienced an increase of 78 deliveries from 1992 to 1993. The evidence that other facilities have continued to experience growth in their obstetrical programs would tend to support Memorial West's position that there is relatively little overlap in the service areas between Memorial West and Plantation, and that Memorial West is drawing the majority of its patients from areas not served by Plantation. Plantation did not offer any evidence that would tend to refute Memorial West's position.

    
    

    Availability of NICU Nurses

    
    

39. The South Broward Hospital District (including Memorial West) pays approximately $2.00 more per hour for trained NICU nurses than Plantation does. Based upon this fact and to that extent, Memorial West is a more desirable place to work from an economic perspective.

    
    

40. Other than salary differential, Plantation did not offer statistical or factual data to support its allegation that there is a shortage of qualified neonatal nurses in District 10, and there is evidence in this proceeding to the contrary. The assertion that Plantation would lose qualified, trained staff and experience recruiting difficulties if Memorial West receives approval for its proposed 10-bed Level II NICU program is not adequately supported on the record.

    
    

41. Plantation presented testimony to the effect that, in order to keep staff and attract staff, it will have to raise nurses' salaries to be competitive with those paid by the South Broward Hospital district, offer better call pay, and increase benefits to their nurses, which will drive up patient costs. However, Plantation did not offer any evidence that would show the degree of financial impact, if any, Memorial West's proposed program would have on Plantation's NICU program.

    
    

42. Plantation has not conducted any research or analysis to determine how Memorial West intended to staff the new unit, including whether there might be trained staff at Memorial Hospital who would transfer to the new facility.

43. There is insufficient evidence on the record to conclude the Memorial West proposal will adversely impact Plantation. While there is evidence of "some" overlap between Memorial West's primary service area and Plantation's secondary service area, Plantation failed to offer any evidence to support its claim of substantial adverse impact.

    
    

    Section 408.035(1)(n), F.S.

    
    

44. Section 408.035(1)(n) relates to "[t]he applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent" and is applicable in this proceeding.

    
    

45. At the time its CON application was submitted, Memorial West had not completed its first year. Therefore, Petitioner could provide very little medicaid data specifically concerning Memorial West.

    
    

46. The AHCA does not consider Medicaid data for Petitioner's sister hospital, Memorial Hollywood, applicable to this batched review because Memorial Hollywood is not the applicant.

    
    

47. Petitioner Memorial West as well as Memorial Hollywood are tax supported by the residents of the South Broward Hospital District (SBHD). Given SBHD's demonstrated record of providing health care services to Medicaid and medically indigent patients, it is reasonable to conclude that Memorial West will continue to provide such services.

    
    

48. Memorial West has committed to provide 28.11 percent of the projected Level II NICU patient days to Medicaid patients. Further, Petitioner projects that by the second year of operation, charity care will contribute to 5.97 percent of patient days from its Level II NICU beds. The reasonableness of these projections was not refuted.

    
    

49. The agency acknowledges that Petitioner should receive partial preferences pursuant to the criteria provided in Section 408.035(1)(n), F.S.

    
    

    Section 408.035(2)(a), F.S.

    
    

50. The review criteria contained in Section 408.035(2)(a), F.S., are applicable to this case and provide as follows:

    
    

    1. Increases of capital expenditure proposals for the provision of new health care services to inpatients, the department shall also reference each of the following in its findings of fact:

       1. That less costly, more efficient, or more appropriate alternatives to such inpatient services are not available and the development of such alternatives has been studied and found not practicable.

          Alternatives Considered

          
          

51. Memorial West determined that the alternative of continuing its current "triage" system of identifying and diverting high risk patients to other facilities prior to delivery, coupled with a system to transfer those newborns not otherwise diverted who are in need of NICU care via ambulance to Memorial Hospital or other facilities in District 10, was not, in the long term, practicable or advisable.

    
    

52. Petitioner's rejection of maintaining its current system as an alternative is based upon the previously discussed problems associated with transferring newborns in need of Level II NICU care to other facilities. Petitioner has also established that deliveries at Memorial West are likely to increase and as a consequence, the number of newborns requiring NICU services will also increase.

    
    

53. Petitioner has established that the alternative of continuing to transfer newborns in need of NICU care is not the most desirable nor efficient alternative.

    
    

    Expansion of Existing Level II NICU at Memorial (Hollywood)

    
    

54. Petitioner established that consideration was given to expanding the existing Level II NICU at Memorial Hollywood but that the Petitioner believes the cost of such expansion would be higher than the cost of establishing the proposed NICU project at Memorial West.

    
    

55. Plantation suggests that the most appropriate alternative for Memorial West was to not establish the Level II NICU program at Memorial West, because Level II beds in the North Broward Hospital District were available and accessible to residents of the South Broward Hospital District. The apparent basis for Plantation's conclusion regarding available beds is the published occupancy data, which, as shown above, is not a reliable indicator of actual occupancy rates within the district. Plantation's own expert agreed that there are problems with the information in these reports, as evidenced by the local health council's erroneous calculation that in 1993, Plantation's Level II NICU program had experienced an average length of stay of 125.2 days.

    
    

56. The greater weight of the evidence showed the available beds in the North Broward Hospital District are not readily accessible alternatives to establishing a 10-bed Level II NICU program at Memorial West. On balance, Memorial West demonstrated that, after study, it made a reasonable determination that there are no less costly, more efficient, practicable or more appropriate alternatives under the circumstances.

    
    

    Section 408.035(2)(b), F.S.

    
    

57. Pursuant to Section 408.035(2)(b), F.S., consideration of Petitioner's application requires reference to whether existing inpatient facilities providing similar services are being used in an appropriate and efficient manner.

    
    

58. Dr. Scott testified that, in his opinion, the existing facilities are operating appropriately and efficiently. As provided above, Memorial West demonstrated that the method of calculating occupancy rates in Level II and Level III NICU beds somewhat skews the occupancy, and results in the under-

    reporting of occupancy in Level II NICU beds. Further, while the reported utilization reflects that approximately 20 percent of the licensed Level II NICU beds were out of service from 1989 to 1993, the overall utilization of the available beds has not been adjusted to reflect beds no longer in use. These factors further support Dr. Scott's conclusion that occupancy for Level II NICU beds was between 75-80 percent for the applicable review period in 1992.

    
    

59. Memorial West has established that AHCA has considered the South Broward Hospital District to be a separate and distinct economic health district within District 10. Actual utilization data, in addition to the testimony of the director of nursing for Memorial Hospital's NICU program demonstrates that Memorial Hospital's NICU program has an average daily census of 28 babies, indicating that its occupancy rate in the Level II beds is greater than the occupancy reported to AHCA by the local health council, and much closer to the

    100 percent level as reflected in the most recent utilization data.

    
    

60. It is not appropriate to consider that the South Broward Hospital District constitutes a separate or "sub" health care district. However, Memorial West has sufficiently demonstrated that the Level II NICU occupancy rate in the South Broward Hospital District meets or exceeds 80 percent, which is the threshold for efficiency and appropriate utilization of an existing facility. Petitioner also demonstrated that north Broward NICU beds are not readily or efficiently accessible to its patients. Memorial West has therefore demonstrated substantial compliance with the criteria of Section 408.035(2)(b), F.S.

    
    

    Section 408.035(2)(c), F.S.

    
    

61. The requirement, pursuant to Section 408.035(c), F.S., is applicable here in that the Petitioner proposes new construction. Therefore, consideration of alternatives such as modernization and sharing arrangements are pertinent to review in this case.

    
    

62. Petitioner established at hearing that the feasibility of expanding the existing NICU program at Memorial Hospital was considered. The alternative of relocating the existing NICU was also considered. Both alternatives were deemed more costly than constructing facilities for a new unit at Memorial West.

    
    

63. Petitioner has demonstrated substantial compliance with the review criteria of Section 408.035(2)(c), F.S.

    
    

    Section 408.035(2)(d), F.S.

    
    

64. Pursuant to Section 408.035(2)(d), F.S., Petitioner presented testimony which references consideration of whether, in the absence of the proposed Level II NICU beds, patients will experience serious problems in obtaining NICU services.

    
    

65. Petitioner has established numerous difficulties that have been and will continue to be encountered by Memorial West due to the absence of Level II NICU facilities at the hospital. These problems are in addition to those already discussed concerning the risks associated with transport of newborns in need of NICU services.

    
    

66. Families encounter longer driving times to visit mother and baby where the mother is admitted to Memorial Hospital prior to delivery.

67. Transfers of babies in need of NICU services from Memorial West to other hospitals result in separation from the mother and cause attendant problems with bonding.

    
    

68. It is less desirable to provide Level II NICU care in a Level III bed as is sometimes now required.

    
    

69. Level II newborns are, by definition, not at imminent risk of death. The risks attendant to transferring such babies are not life threatening and there is no evidence that any neonate has died or suffered an adverse change in condition as a result of transfer from Memorial West to another facility. Petitioner has, however, established dramatic increases in deliveries occurring at Memorial West, a high occupancy rate at the Memorial Hospital Level II NICU facility, and numerous difficulties Memorial West encounters in accessing NICU services in north Broward County.

    
    

    Rule 59C-1.042(3)(j), F.A.C.

70. Rule 59C-1.042(3)(j), F.A.C., provides, in pertinent part: [n]ew Level II or Level III [NICU] ... beds

    shall normally be approved only if the applicant converts a number of acute care beds ... which is equal to the number of Level II or Level III

    beds proposed, unless the applicant can reasonably project an occupancy rate of 75 percent for the applicable planning horizon, based on historical utilization patterns, for all acute care beds ... (emphasis supplied)

    
    

71. After reviewing Memorial West's CON application, AHCA determined that Memorial West satisfied this review criteria.

    
    

    Rule 59C-1.042(3)(k), F.A.C.

    
    

72. As set forth above, Memorial West has demonstrated compliance with the State Health Plan preference for applicants who propose to provide NICU services to Children's Medical Services patients, Medicaid patients, and charity care patients.

    
    

73. By its second year of operating the Level II NICU program, Memorial West has projected that it will provide 5.97 percent of patient days to Medicaid, 5.97 percent of patient days to charity care/other. Memorial West did not include any projected percent of patient days to RPICC or step-down care. Memorial West explained the RPICC and step-down program are located at Memorial Hospital. SBHD proposed that the addition of a 10-bed Level II NICU program at Memorial West will increase the availability of Level II beds at Memorial Hospital for step-down care associated with RPICC.

    
    

74. On balance, Memorial West has demonstrated that its CON application is consistent with the criteria of the rule provisions.

    
    

    Minimum Birth Volume Requirement Pursuant to Rule 59C-1.042(6), F.A.C.

75. This rule provides, in pertinent part:

    
    

    Hospitals applying for Level II neonatal intensive care services shall not normally

    be approved unless the hospital had a minimum service volume of 1,000 live births for the most recent 12-month period ending 6 months prior to the beginning date of the quarter

    of the publication of the fixed need bed pool.

    
    

76. The applicable time period addressed by the rule falls in the 1992 calendar year, the year in which Memorial West opened. During its first eight months of operation, Memorial West reported in excess of 600 births. The number of deliveries has continued to increase at Memorial West. During the 1993 calendar year, Memorial West experienced more than 1,700 live births, an increase of more than 1,000 births. Memorial West reported in excess of 2,000 live births in its second fiscal year of operation. Memorial West reasonably anticipates that it will achieve between 2,400 and 2,500 live births during the current fiscal year.

    
    

77. The Rule's 1,000 live birth requirement is a reasonable criteria for assuring that the facility will be able to operate at an efficient and effective level, with respect to both cost and staffing, and ensure that experienced staff will be able to maintain skills in providing the necessary services. Hospitals with low birth volumes cannot adequately attain the level of utilization required to support a Level II NICU program.

    
    

78. The AHCA's CON consultant agreed that, where a hospital is currently performing a significant number of live births, such as in excess of 2,000, it could be a supporting factor in the decision to award a certificate of need to establish a Level II NICU program.

    
    

79. Memorial West has demonstrated that it is already experiencing a significantly higher birth volume than that provided for by Rule, and that it could attain the level of utilization necessary for the cost-effective and efficient operation of its proposed 10-bed Level II NICU program.

    
    

    Plantation's Standing to Intervene

    
    

80. As presently operated, the system operated by Memorial West to provide Level II NICU services when needed has been to transfer patients (both expectant mothers where it is determined the NICU services may be required and neonates when unanticipated problems are encountered post delivery) to Memorial Hospital. There is no evidence on record that, pursuant to status quo, Plantation has received Level II NICU admissions from Memorial West in the past.

    
    

81. The evidence presented does establish that there is an overlap between Plantation and Memorial West, mostly in Plantation's secondary service area.

    
    

82. The only substantial analysis presented at hearing concerning impact on Plantation patient admissions was provided by Petitioner's expert in health care economics and planning. This witness testified that Plantation might lose four patients if physicians who currently have staff privileges at Memorial West and Plantation decide to deliver only at Petitioner's facility based upon approval of its Level II NICU proposal.

83. Plantation's expert in health planning testified that, in her opinion, Plantation would lose patients if the application of Memorial West was approved but the weight of the evidence on the record does not provide support to this testimony in terms of any quantitative loss of patients by Plantation.

    
    

84. Plantation has established that Memorial West is paying $2.00 per hour more in terms of salaries to NICU nurses than Plantation. The evidence supports the theory that approval of the CON application at issue could result in the loss of trained and skilled nurses from Plantation to Memorial West.

    This does not, however, provide a sufficient basis to find, as a matter of fact, that approval of the CON in question will result in a loss of staff at Plantation such that quality of care will suffer in delivery of its NICU services. At best, the testimony evinces some economic impact on Plantation due to competition in salaries paid to nursing staff.

    
    

    CONCLUSIONS OF LAW

    
    

85. The Division of Administrative Hearings has jurisdiction of the subject matter of and the parties to this proceeding, pursuant to Subsection 408.039(5), Florida Statutes.

    
    

    Standing

    
    

86. Prior to the final hearing, Petitioner filed a Motion for Summary Recommended Order to dismiss Plantation as a party based upon Plantation's failure to demonstrate that the award of the CON at issue would have a substantial adverse impact on Plantation's existing NICU program. Based upon Plantation's response to this motion, the motion was denied without prejudice.

    
    

87. Plantation's response to the Motion for Summary Recommended Order included the assertion that, on information and belief, the AHCA witnesses would provide evidence supporting the substantial adverse impact the Memorial West proposal would have on Plantation. In fact, the sole AHCA witness at hearing did not provide testimony regarding any impact on Plantation should the CON at issue be approved.

    
    

88. After the final hearing, Petitioner renewed its Motion for Summary Recommended Order. In its renewed motion, Petitioner contends that the evidence offered at the final hearing failed to prove any substantial impact on Plantation's existing NICU program.

    
    

89. The evidence presented at hearing demonstrates that, at best, the approval of the CON application at issue would likely result in the loss of four patients to Plantation. Plantation's strongest proof indicates that, due to higher ($2.00 per hour) nurses' salaries paid by Memorial West, Plantation might lose staff if Petitioner implemented a Level II NICU program. There was no proof at hearing that the nurses shortage experienced in the past in District 10 exists currently and, in fact, Plantation elicited testimony to the contrary.

    
    

90. The evidence in this case further supports Petitioner's contention that the agency considers District 10 to consist of two separate medical markets, north Broward and South Broward Counties. The closest Level II NICU provider to Memorial West is its sister hospital, Memorial (in Hollywood). The evidence establishes that all neonates delivered at Memorial West in need of NICU services have been transported to Memorial and none to Plantation, the next nearest NICU provider. In fact, the evidence shows that Petitioner has not transported any newborn to any North Broward NICU provider.

91. No NICU provider in District 10, other than Plantation, opposed Petitioner's CON application at the final hearing.

    
    

92. Plantation's proof regarding standing in this case establishes only the possibility that, should the CON be approved, Plantation might lose trained NICU nurses to Memorial West due to Memorial West paying higher hourly wages than does Plantation. Plantation has not demonstrated any substantial effect on its NICU program should Petitioner prevail in this case, beyond a potential competitive economic impact.

    
    

93. Where the only proof of substantial interest is future adverse economic impact, unquantified and not shown to result in a substantial adverse impact to an established program, the interests of the hospital in question do not fall within the zone of interest the statute was designed to protect. North Ridge General Hospital vs. NME Hospitals, Inc., 478 So.2d 1138, 1139 (Fla. 1st DCA 1985). See, also, Agrico Chemical Company vs. Department of Environmental Reg., 406 So.2d 478, 482 (Fla. 2nd DCA 1981). It is thus concluded that Plantation has failed to establish standing in this proceeding and Petitioner's renewed Motion for Summary Recommended Order, filed with the Division of Administrative Hearings on November 4, 1994, is granted.

    
    

    Petitioner's Exhibit 8

    
    

94. During the hearing, AHCA and Plantation objected to Petitioner's introduction of a report entitled Florida Hospital Bed Utilization by Quarter by District: January 1, 1993-December 31, 1993 (Petitioner's Exhibit 8). An objection was also made that Petitioner's witness was using the report to adopt a method of calculating occupancy rates at Memorial Hospital that was not alluded to in the CON application. Based on these arguments, both AHCA and Plantation contend that the admission of the exhibit and testimony in question constitute an impermissible amendment to Petitioner's CON application. Ruling on this objection was reserved to give the parties the opportunity to file memoranda of law.

    
    

95. Memorial West filed its application for the CON at issue in March 1993. The data contained in the disputed exhibit was not available to Petitioner at the time the application was filed.

    
    

96. "To the extent that evidence explains or elaborates on assertions made in an application and the evidence does not change the nature and scope of the proposal, such evidence does not constitute an impermissible amendment." NME Hospitals, Inc. vs. Department of Health and Rehabilitative Services, 14 FALR 1882, 1883-1884 (HRS 1992).

    
    

97. Nothing in the challenged exhibits or the testimony introduced to update and reexamine the occupancy rates in question are an attempt to change proposed services, number of beds, proposed construction, or any concept in the CON application which was not initially reviewed by the agency. In a de novo proceeding, such as this, data which has become available, solely due to the passage of time, and which either supports or refutes projections included in the original application is admissible. Health Care and Retirement Corp. of America vs. Department of Health and Rehabilitative Services, 516 So.2d 292 (Fla. 1st DCA 1987).

98. Cases cited by counsel for AHCA in support of the objection are distinguishable on the facts and are not persuasive. Based upon the foregoing case law, the objection to the introduction of Petitioner's Exhibit 8 and to the testimony offered regarding updated occupancy rates at Memorial Hospital are overruled and the evidence in dispute is admitted.

    
    

    Burden of Proof

    
    

99. Memorial West, as the applicant, has the burden of proving its entitlement to a CON based on balanced consideration of statutory and rule criteria. Boca Raton Artificial Kidney Center vs. Department of Health and Rehabilitative Services, 486 So.2d 1341 (Fla. 1st DCA 1986).

    
    

100. A CON application is evaluated according to the statutory criteria set forth in Section 408.035, F.S., and the valid rules properly promulgated pursuant to the statute. A balanced consideration of the applicable statutory and rule criteria must be made. Humana, Inc. vs. Department of Health and Rehabilitative Services, 469 So.2d 889 (Fla. 1st DCA 1985).

     
     

101. In this case, Petitioner does not challenge the AHCA fixed need pool or zero for the applicable time period. Instead, Memorial West seeks approval of its CON application based upon "not normal circumstances."

     
     

102. The absence of numeric need cannot, in and of itself, be the reason for denial of a CON. The lack of numeric need under the rule formula merely establishes a rebuttable presumption of no need. Humhosco vs. Department of Health and Rehabilitative Services, 476 So.2d 258, 261 (Fla. 1st DCA 1985). In these circumstances, a CON application may nevertheless be approved if a demonstration is made that there are "not normal circumstances" which warrant approval. Humana, Inc. vs. Department of Health and Rehabilitative Services, 492 So.2d 388 (Fla. 1st DCA 1986).

     
     

     Not Normal Circumstances

     
     

103. Memorial West has established three factors in support of its "not normal circumstances" position which it contends are justification for approval of its CON application. Petitioner established: (1) an exceptional increase in numbers of live births at Memorial West since the hospital opened in 1992; (2) the recognition of two separate medical markets in District 10 by the agency; and (3) the maldistribution of Level II NICU beds in the district with 88 percent of such beds located in north Broward County.

     
     

104. Memorial West established that its live birth rate currently exceeds 2,000 per year. The AHCA's witness conceded that such an annual birth rate within the first two years of the hospital's operation should be extenuating circumstance in approving Petitioner's proposal. Petitioner also established a reasonable current annualized figure of 2,480 to 2,500 live births and that, at the close of 1993, every hospital in Florida experiencing more than 2,500 deliveries had an existing or approved Level II NICU program.

     
     

105. Memorial West also established that the agency has historically considered north and south Broward Counties as two distinct medical markets.

     The AHCA acknowledges this traditional distinction in both the SAAR and in testimony at hearing in this proceeding. Petitioner further demonstrated that a separation of medical markets in District 10 applies specifically to obstetrical services. The evidence shows that there is little patient and physician overlap between north and south Broward Counties and that physician practice patterns as

     well as guidelines for obstetrician emergency response time make Level II NICU providers in north Broward in effect not reasonably accessible to patients in the southwestern portion of the County.

     
     

106. The third factor established as a "not normal circumstance" in this case is the maldistribution of beds within the service district. Only twelve percent of the Level II NICU beds in District 10 are located in south Broward County, all of them at Memorial Hospital (the only NICU provider in south Broward). Petitioner also established that Memorial Hospital's Level II NICU beds are overutilized.

     
     

107. The AHCA and the Intervenor have contended that the traditional distinction between the north and south Broward Counties medical market should not present "not normal circumstances" to justify approval of Petitioner's Level II NICU proposal for two distinct reasons.

     
     

108. First, NICU services are specifically defined by statute as tertiary and, as such, should, by operation of statute and rule, "be limited to and concentrated in a limited number of hospitals to ensure the quality, availability, and cost effectiveness of such service." Section 408.32(19), F.S., see also Rule 59C-1.002(66), F.A.C.

     
     

109. In addition, Rule 59C-1.042(7), F.A.C., provides "Level II and Level III neonatal intensive care services shall be available within 2 hours ground travel time under normal conditions for 90 percent of the population in the service district." There is no challenge to this agency rule and the facts indicate that there are available Level II NICU beds in north Broward County within two hours ground transport time of Memorial West.

     
     

110. Agency precedent, however, establishes that the traditional distinction in north and south Broward medical markets has been applied in the past to approve CON applications for tertiary services and despite the existence of a very similar "ground transportation time" rule.

     
     

111. South Broward Hospital District, d/b/a Memorial Hospital vs. Department of Health and Rehabilitative Services, et al., 14 FALR 3163 involved a CON application for Comprehensive Medical Rehabilitation (CMR) beds. CMR is also defined by statute as a tertiary service. Section 408.032(19), F.S. In addition, the agency rules provided that a two hour drive time was acceptable for CMR services, Id., 3164-3165.

     
     

112. In its Final Order in the South Broward Hospital District CMR case, the agency rejected the argument against approval of the CON based on the tertiary service statute because of high utilization and problems of accessibility. Further, the agency held that, despite the fact that the two hour drive time rule was in effect, the rule provision was not violated in light of the finding of inaccessibility based on the "difficulty experienced by residents of southern Broward County in obtaining CMR services because of the distinct north-south pattern of physician staff privileges and the fact that most CMR beds are located in the northern portion of Broward County." Id., emphasis supplied.

     
     

113. The South Broward Hospital District CMR case cited above is persuasive. The facts in that case are strikingly similar to those in this proceeding, and AHCA has articulated no rational basis to deviate from its position announced in that case. The Final Order in the prior CMR case is therefore dispositive. Based upon this agency precedent, the approval of the

     CON in this case does not constitute a violation of the tertiary care statute nor is such a decision incompatible with the agency ground travel response time rule.

     
     

     Balanced Consideration of Statutory and Administrative Rule Review Criteria Applicable to a Proposal to Establish

     Neonatal Intensive Care Services

     
     

114. Having established the need for a 10-bed Level II NICU project in southwest Broward County based on not normal circumstances, Memorial West must establish that its CON application, on balance, meets the criteria of Section 408.035, F.S., and Rule 59C-1.042, F.A.C., after a balancing and weighing of the criteria. Department of Health and Rehabilitative Services vs. Johnson & Johnson Home Health Care, Inc., 447 So.2d 361, 363 (Fla. 1st DCA 1984). The weight to be given each criteria is not fixed, but varies depending on the facts of each case. Collier Medical Center, Inc. vs. Department of Health and Rehabilitative Services, 462 So.2d 83 (Fla. 1st DCA 1985); Northridge General Hospital vs. NME Hospitals, 478 So.2d 1138 (Fla. 1st DCA 1985).

     
     

     Compliance with State and Local Health Plans

     
     

115. As demonstrated above, the greater weight of the evidence demonstrated that Memorial West's CON application is substantially consistent with the district health plan recommendations, as well as the state health plan preferences. "The very title of 'preferences' [or recommendations] shows that they are not minimum criteria which an application must meet." Florida Medical Center, Ltd. vs. Agency for Health Care Administration, 14 FALR 4467, 4474 (Agency for Health Care Administration 1992). The testimony and evidence presented at the hearing shows that it is not unusual--indeed it is "typical"-- for CON applicants to only partially meet both state and district health plans. State health plan preferences and local health council recommendations are merely guidelines to apply among competing applications and are not preconditions to approval. See South Broward Hospital District vs. Department of Health and Rehabilitative Services, 14 FALR 3163, 3180 (Dept. of Health and Rehabilitative Services 1992).

     
     

116. Memorial West's CON application meets the criteria in Section 408.035(1)(a), F.S., and Rule 59C-1.042(3)(h), F.A.C., by having demonstrated need in relation to the applicable state and local health plans.

     
     

     Section 408.035(1)(b), F.S.

     
     

117. Memorial West presented credible evidence that the Level II NICU beds at Memorial Hospital, the closest Level II NICU provider, are overutilized, and that the existing Level II NICU beds in the North Broward Hospital District are not reasonably accessible to infants delivered at Memorial West who are in need of Level II care because of the risks associated with transportation of the infants, the physician practice and referral patterns, and practice guidelines.

     
     

     Alternative Use of Resources

     
     

118. Pursuant to Section 408.035(1)(d), F.S., Memorial West demonstrated that the expansion of its obstetrical program, including establishing a 10-bed Level II NICU program, has been deemed a priority by the SBHD. Given the significant increase in the volume of births at Memorial West, and the continued

     population growth in the southwestern area of Broward County, the proposed 10- bed Level II NICU project is the most appropriate, cost-effective and efficient use of SBHD's resources.

     
     

     Long Term Financial Feasibility

     
     

119. Pursuant to section 408.035(1)(h), F.S., credible testimony confirmed that Memorial West's projected 14.2 day average length of stay is reasonable, as it is based on the actual experience at Memorial Hospital and AHCA's utilization reports. Memorial West also presented credible evidence that its utilization projections were reasonable and conservative, especially in light of the actual utilization experience at Memorial Hospital, and the extraordinary increase in birth volume at Memorial West in its two years of operation.

     
     

     Impact on Existing Providers

     
     

120. Pursuant to Section 408.035(1)(l), F.S., Memorial West's proposed project will help alleviate overutilization of Level II beds at Memorial Hospital, the closest Level II provider to Memorial West. The Level II beds at Plantation, the next closest NICU provider to Memorial West, are not accessible to obstetrical patients residing in southwest Broward County. Service area overlap with Plantation occurs only in Plantation's secondary service area. The evidence established that there is no NICU trained nursing shortage in Broward County, and that Plantation is not likely to experience a loss in patients if Memorial West's project is approved. Plantation failed to effectively rebut this evidence, and offered no evidence or data to support its claim that Plantation would lose patients or qualified staff, or suffer economic loss if Memorial West's proposed project is approved.

Past and Proposed Care to Medicaid and Medically Indigent

168. Pursuant to Section 408.035(1)(n), F.S., and Rule 59C-1.042(3)(k), F.A.C., Memorial West demonstrated its commitment to serve Medicaid patients and the medically indigent in its proposed Level II NICU program. Memorial West proposes to serve Medicaid patients and the medically indigent in its Level II NICU beds, and there is no reason to doubt that Memorial West will not achieve the level of Medicaid and charity care it proposes to provide.

No Less Costly, More Efficient or Appropriate Alternatives

1. Pursuant to Sections 408.035(2)(a) and 408.035(2)(c), F.S., Memorial West established that SBHD considered the alternatives of continuing to transport newborns, expanding Memorial Hospital's Level II NICU program, and doing nothing about the overutilization of Level II NICU beds in the South Broward Hospital District, and rejected each alternative as contrary to sound health planning policy.

   
   

   Existing Facilities Being Used in Appropriate and Efficient Manner

   
   

2. Pursuant to Section 408.035(2)(b), F.S., Memorial West established that the existing Level II NICU programs in Broward County are experiencing occupancy rates between 75-80 percent, which demonstrates that these facilities are being used in an appropriate and efficient manner. Further, occupancy rates in the South Broward Hospital District exceed the 80 percent occupancy threshold for efficient and appropriate utilization of Level II NICU beds.

   Difficulty in Obtaining Level II NICU Care

   
   

3. Pursuant to Section 408.035(2)(d), F.S., Memorial West established that without the proposed Level II NICU services at Memorial West, residents of southwest Broward County will experience problems in obtaining Level II NICU care, including the necessity of transferring infants in the first critical hours of birth with its associated risks to the newborn, and the geographic separation of mothers from their babies. Memorial West offered credible testimony that very few physicians practicing at Memorial West also have staff privileges at hospitals in the North Broward Hospital District, which means that without the Level II NICU program at Memorial West, the possibility exists for a mother and newborn to be transferred to a facility where their physician cannot provide the continuity of care to the mother and newborn.

   
   

   Exemption from Requirement to Convert Acute Care Beds

   
   

4. As indicated in the SAAR, Memorial West is exempt from the requirement to propose to covert acute care beds pursuant to Rule 59C- 1.042(3)(j), F.A.C., because it reasonably projects that it will achieve 75 percent occupancy in its acute care beds for the 1995 planning horizon, which is the applicable planning horizon for establishing its proposed Level II NICU program.

   
   

   Minimum Birth Volume Requirement

   
   

5. Memorial West established that the number of live births has continued to increase and that its volume of births exceeds the minimum required by the rule to demonstrate that the hospital will be able to maintain sufficient utilization to support the proposed Level II NICU beds. (See e.g. NME Hospitals, Inc. vs. Department of Health and Rehabilitative Services, 14 FALR 1882, 1886 (Department of Health and Rehabilitative Services 1992)).

   
   

6. On balance, Memorial West has demonstrated that its CON application complies with the applicable statutory review criteria found at Section 408.035, F.S., and the administrative rule review criteria found at Rule 59C-1.042, F.A.C.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED:

1. That Plantation General Hospital, L.P. be dismissed as a party to these proceedings based upon its failure to demonstrate standing, and

   
   

2. That Certificate of Need No. 7249 be granted to South Broward Hospital District, d/b/a Memorial Hospital West to establish a 10-bed Level II Neonatal Intensive Care Unit at its Pembroke Pines facility.

DONE and ORDERED this 20th day of January, 1995, in Tallahassee, Florida.

JAMES W. YORK

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 20th day of January, 1995.

ENDNOTES

1/ Galen of Florida, Inc., d/b/a Westside Regional Medical Center, also timely filed a petition to challenge AHCA's intent to preliminarily deny its CON application. Galen's petition was assigned DOAH Case No. 93-4880. Prior to the final hearing in this matter, and pursuant to a Motion for Summary Recommended Order filed by the North Broward Hospital District, an intervenor in DOAH Case No. 93-4880, Galen's petition was dismissed and its CON application administratively withdrawn.

2/ The hearing transcript contains numerous errors in the text of the proceedings, including errors in the list of exhibits at T. 4. Petitioner's list indicates that exhibits "7 & 12" were introduced and received into evidence at T. 284, when counsel addressed exhibits 11 and 12. Likewise, Respondent's list omits Exhibit 2, introduced at T. 398, and received into evidence at T.

401, as well as Exhibit 7, which is addressed at T. 407.

3/ Section 408.035(o), Florida Statutes, was added by Chapter 93-217, Laws of Florida (1993), and did not become effective until October 1, 1993. As such, this provision is not applicable to Memorial West's application which was filed and reviewed prior to the effective date of this section.

APPENDIX TO RECOMMENDED ORDER

Rulings on Petitioner's Proposed Findings of Fact:

1-8. Adopted in paragraphs 1-10 of the Recommended Order.

1. Adopted in paragraph 12 of the Recommended Order.

2. Adopted in paragraph 16 of the Recommended Order.

3. Adopted in paragraphs 14-15 of the Recommended Order.

4. Adopted in substance in paragraph 17 of the Recommended Order.

5. Adopted in paragraph 18 of the Recommended Order.

6. Adopted in paragraph 19 of the Recommended Order.

7. Adopted in paragraph 56 of the Recommended Order.

8. Adopted in substance in paragraph 21 of the Recommended Order. 17-18. Adopted in paragraphs 22-24 of the Recommended Order.

1. Adopted in paragraph 20 of the Recommended Order.

2. Adopted in paragraph 16 of the Recommended Order.

3. Adopted in paragraph 26 of the Recommended Order.

4. Adopted in paragraph 28 of the Recommended Order.

5. Adopted in paragraph 29 of the Recommended Order.

6. Adopted in paragraph 30 of the Recommended Order.

7. Adopted in substance in paragraphs 14 and 15 of the Recommended Order.

8. Adopted in substance in paragraph 32 of the Recommended Order.

9. This conclusion addressed in the Conclusions of Law portion of the Recommended Order and adopted in part in paragraph 31 of the Recommended Order.

28-29. Adopted in substance in paragraph 36 of the Recommended Order.

30. Adopted in substance in paragraph 37 of the Recommended Order.

31-32. Subordinate to finding in paragraph 41 of the Recommended Order.

1. Cumulative and not necessary to conclusions reached.

2. Adopted in substance in paragraphs 13-15 and 38 of the Recommended Order.

3. Adopted in substance in paragraph 40 of the Recommended Order.

36-40. Adopted in substance in paragraphs 42-46 of the Recommended Order.

41. Adopted in substance in paragraph 48 of the Recommended Order.

42-43. Adopted, in material part, in paragraphs 51-53 of the Recommended Order.

44. Adopted in substance in paragraph 54 of the Recommended Order.

45-47. Adopted in substance in paragraphs 55-58 of the Recommended Order.

1. Subordinate to Findings of Fact in paragraph 60 of the Recommended Order.

2. Cumulative, not necessary to the conclusion reached.

50-53. Adopted, in material part, in paragraphs 60-63 of the Recommended Order.

54-62. Adopted in substance in paragraphs 64-72 of the Recommended Order.

63. Adopted, in material part, in paragraph 76 of the Recommended Order. 67-70. Adopted, in material part, in paragraphs 79-85 of the Recommended

Order.

71-74. Adopted, in material part, in paragraphs 86-90 of the Recommended Order.

75-79. Adopted, in material part, in paragraphs 91-96 of the Recommended Order.

1. Cumulative, repetitive and not necessary to the conclusions reached in the Recommended Order.

2. Adopted in substance in paragraph 97 of the Recommended Order.

82-85. Adopted, in material part, in paragraphs 112-115 of the Recommended Order.

1. Adopted in substance in paragraph 100 of the Recommended Order.

2. Adopted in substance in paragraph 101 of the Recommended Order. 88-89. Adopted in substance in paragraphs 102-103 of the Recommended

Order.

90-92. Adopted in substance in paragraphs 104-106 of the Recommended Order.

93-94. Adopted in substance in paragraphs 108-110 of the Recommended Order.

95-99. Adopted in substance in paragraphs 112-115 of the Recommended Order.

100. Cumulative.

101-102. Adopted in substance in paragraphs 117-118 of the Recommended Order.

103. Cumulative.

104-106. Adopted in substance in paragraphs 119-121 of the Recommended Order.

107-115. Adopted in substance in paragraphs 122-131 of the Recommended Order.

Rulings on Respondent's Proposed Findings of Fact:

1. Adopted in paragraph 10 of the Recommended Order.

2-3. Addressed in the Conclusions of Law in the Recommended Order.

4-9. Adopted, in material part, in paragraphs 11-13 of the Recommended Order.

10-11. Subordinate to findings in paragraphs 14-17 of the Recommended Order.

12-13. Adopted, in material part, in paragraph 20 of the Recommended Order.

14-15. Rejected as a conclusion and subordinate to facts found in paragraphs 18-19 of the Recommended Order.

1. Unnecessary detail.

2. Cumulative and conclusory.

3. Adopted, in material part, in paragraph 74 of the Recommended Order.

4. Conclusions addressed in the Conclusions of Law in the Recommended Order.

5. Adopted in paragraph 12 of the Recommended Order.

6. Adopted, in material part, in paragraphs 11-13 of the Recommended Order.

7. Recorded in the preliminary statement and obvious from findings in paragraph 10 of the Recommended Order.

8. Not relevant pursuant to stipulation of parties.

24-26. Not necessary to conclusions reached and/or addressed in the Conclusions of Law in the Recommended Order.

27. Subordinate to facts found in paragraphs 78-85 and 127-131 of the Recommended Order.

28-39. Subordinate to facts found in paragraphs 36-42 of the Recommended Order.

40-45. Adopted, in material part, in paragraphs 43-46 of the Recommended Order.

46-47. Not necessary to the conclusions reached in the Recommended Order. 48-61. Subordinate to facts found in paragraphs 47-53 of the Recommended

Order.

62-63. Adopted, in material part, in paragraph 63 of the Recommended Order.

64-71. Subordinate to Findings of Fact in paragraphs 47-53 of the Recommended Order.

72. Subordinate to Findings of Fact in paragraphs 98-103 of the Recommended Order.

73-74. Not necessary to conclusions reached.

75. Repetitive and cumulative.

76-77. Conclusions and argument addressed in the Conclusions of Law in the Recommended Order.

78. Repetitive and cumulative.

79-81. Petitioner did not make such arguments at hearing, and based upon conclusions reached in the Recommended Order, the proposed facts are not at issue.

82-87. Subordinate to facts found in paragraphs 60-72 of the Recommended Order.

88-104. Subordinate to findings found in paragraphs 73-90 of the Recommended Order.

105-109. Adopted, in material part, in paragraphs 91-96 of the Recommended Order.

110-126. Subordinate to Findings of Fact in paragraphs 97-103. 127-134. Subordinate to Findings of Fact in paragraphs 104-107.

135. Cumulative and addressed elsewhere in this Appendix.

136-138. Subordinate to facts found in paragraphs 111-115 of the Recommended Order. Proposed finding 138 is adopted in paragraph 116 of the Recommended Order.

Rulings on Intervenor's Proposed Findings of Fact:

1-2. Adopted in substance in paragraph 2-3 of the Recommended Order.

1. Adopted in material part in paragraph 18 of the Recommended Order.

2. Cumulative and addressed in numerous portions of the Recommended Order. 5-6. Adopted in paragraph 6-7 of the Recommended Order.

1. Portions of this proposed finding are subordinate to facts found in the Recommended Order; the remainder is detail unnecessary to the conclusions reached.

2. Adopted, in material part and in substance, in paragraph 57 of the Recommended Order.

9-10. Adopted, in material part, in paragraphs 21-22 of the Recommended Order.

1. Adopted, in material part, in paragraphs 35, 48-49 of the Recommended Order.

2. Adopted, in material part, in paragraphs 10-11 of the Recommended Order.

3. Adopted, in material part (and to the extent that this proposal is not argument), in paragraphs 36-41 of the Recommended Order.

4. Adopted, in material part (and to the extent that the proposal is not repetitive argument), in paragraph 45 of the Recommended Order.

5. Adopted, in material part, in paragraphs 91-94 of the Recommended Order.

6. Subordinate to facts found in paragraphs 47-53 of the Recommended Order.

17-18. Rejected on the basis that the proposal is argument addressed in the Conclusions of Law in the Recommended Order.

1. Partially adopted in paragraphs 47-53 and 74 of the Recommended Order. Argument and conclusion in the proposed findings are rejected. Other portions are subordinate to findings in paragraphs 47-53 of the Recommended Order.

2. Adopted in paragraph 54 of the Recommended Order.

3. Adopted in paragraph 8 of the Recommended Order.

22-23. Subordinate to findings in paragraphs 86-90 of the Recommended Order.

24. Adopted in paragraph 8 of the Recommended Order.

25-30. Subordinate to findings made in paragraphs 60-72 of the Recommended Order.

1. Adopted, in material part, in paragraphs 91-96 of the Recommended Order.

2. Adopted in paragraphs 97, 104, 108 and 111 of the Recommended Order.

3. Subordinate to Findings of Fact in paragraphs 97-100 of the Recommended Order.

4. Subordinate to Findings of Fact in paragraphs 104-107 of the Recommended Order.

5. Subordinate to Findings of Fact in paragraphs 108-110 of the Recommended Order.

6. Adopted, in material part, in paragraph 116 of the Recommended Order. The remainder of this proposal is subordinate to Findings of Fact in paragraphs 111-115 of the Recommended Order.

37-39. Subordinate to facts found in paragraphs 10-20 and 36-46 of the Recommended Order.

1. Subordinate to paragraph 117 of the Recommended Order.

2. Adopted in paragraph 119 of the Recommended Order.

3. Subordinate to Findings of Fact in paragraphs 123-126 of the Recommended Order.

43-48. Subordinate to Findings of Fact in paragraphs 129-131 of the Recommended Order.

1. Rejected, not necessary to the conclusions and unnecessary detail.

2. Adopted, in material part, in paragraph 20 of the Recommended Order. 51-53. Rejected, repetitive and cumulative.

1. Adopted, in material part, in paragraph 74 of the Recommended Order.

2. Not necessary to the conclusions reached.

56-61. Rejected, unnecessary detail and not necessary to the conclusions reached.

62. Rejected as argument and conclusions addressed in the Conclusions of Law of the Recommended Order.

COPIES FURNISHED:

Dean Bunton, Esquire Senior Attorney

Agency for Health Care Administration The Atrium, Suite 301

325 John Knox Road

Tallahassee, Florida 32303-4131

Sam Power, Agency Clerk

Agency for Health Care Administration The Atrium, Suite 301

325 John Knox Road

Tallahassee, Florida 32303-4131

R. Terry Rigsby, Esquire

F. Philip Blank, Esquire BLANK, RIGSBY & MEENAN

204 South Monroe Street Tallahassee, Florida 32301

Clarke Walden, Esquire Memorial Hospital

3501 Johnson Street

Hollywood, Florida 33021

Jay Adams, Esquire

215 South Monroe Street, Suite 400 Tallahassee, Florida 32301

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

================================================================= AGENCY FINAL ORDER

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

STATE OF FLORIDA

AGENCY FOR HEALTH CARE ADMINISTRATION

SOUTH BROWARD HOSPITAL DISTRICT d/b/a MEMORIAL HOSPITAL WEST,

Petitioner, CASE NO: 93-4881 CON NO: 7249

vs. RENDITION NO.: AHCA-95-

832-FOF-CON

STATE OF FLORIDA, AGENCY FOR HEALTH CAKE ADMINISTRATION AND

PLANTATION GENERAL HOSPITAL, L. P.,

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 Agency for Health Care Administration (AHCA). The Recommended Order entered January 20, 1995, by Hearing Officer James W. York is incorporated by reference.

RULING ON JOINT EXCEPTIONS FILED BY AHCA AND PLANTATION

South Broward Hospital District challenged the agency's initial decision to deny its application for a CON to establish a Level II, 10 bed neonatal intensive care unit (NICU) at Memorial Hospital West. There was no numeric need for the proposal, but the hearing officer recommends that the CON be approved on the basis of "not normal" circumstances. At the final administrative hearing Plantation General Hospital (Plantation) intervened to Support the initial denial decision.

Counsel except to the hearing officer's conclusion that the current annualized number of births at Memorial West is a "not normal" circumstance. Memorial West received its hospital license in May of 1992 and the hearing officer's conclusion is founded on the dramatic increase in the number of births in the short period of time between licensure and the date of the final hearing, August 9 and 10, 1994. Annualized, the number of live births at Memorial West exceeds 2,400. This finding is highly relevant in the context of the findings of accessibility problems experienced by residents of southern Broward County in need of NICU services, the low number of NICU beds in southern Broward, and the overutilization of the existing beds in southern Broward where Memorial West is located. These findings cumulatively demonstrate a severe problem of accessibility of existing NICU beds which threaten the quality of care in southern Broward. The exception is denied.

Counsel except to the hearing officer's conclusion that there are two distinct medical markets in District 10 (Broward County) constituting a "not normal" circumstance. The findings of accessibility problems experienced by residents of southern Broward in need of NICU services are clearly supported by competent, substantial evidence in this proceeding. Additionally, the argument that receiving evidence on this issue constitutes a defacto subdistricting has been rejected. South Broward Hospital District vs. Department of Health and Rehabilitative Services, 14 FALR 3163 (HRS 1992). This evidence is circumstantially relevant to the issue of accessibility of NICU services and is admissible. The exception is denied.

Counsel except to the hearing officer's conclusion that the maldistribution of NICU beds in Broward County is a "not normal" circumstance. In light of the accessibility problems, the fact that only a very small proportion (12 percent) of the total beds are in the southern Broward, and the fact that those beds in the south are over utilized, I concur with the hearing officer. The exception is denied.

Counsel maintain that Memorial West's application should be denied in light of the statutory definition of NICU as a tertiary service. I disagree. The tertiary status of NICU services is important, but it is not dispositive where there are sufficient "not normal" circumstances.

Counsel except to the hearing officer's conclusion that as a matter of law there was "substantial compliance" with the rule requirement that district wide, NICU beds should be at least 80 percent occupied. I disagree with the hearing officer for the following reasons: first, numeric need of zero calculated under the need rule was not challenged. Second, the hearing officer disregarded 16 licensed beds in the northern Broward County because they were not presently open for use. Presumably, these beds can be quickly placed in service when there is demand. Third, even if the rule methodology were applicable, the rule requires average occupancy to be 80 percent or more, not almost 80 percent.

This exception is granted.

Counsel except to the hearing officer's reliance on Dr. Scott's calculation of a need for 10 more NICU beds in the southern Broward County. I conclude that here the hearing officer crossed the line into use of a non-rule numeric need formula. Use of this formula constitutes a deviation from the existing rule formula, and his calculation should not be considered. This exception is granted. Health Quest Realty vs. Department of Health and Rehabilitative Services, 477 So2d 576, 579 (Fla. 1st DCA 1985). Paragraph 32 of the Recommended Order is stricken.

Finally, counsel except to the hearing officer's conclusion that Plantation failed to establish standing to participate as a party in this proceeding. I conclude that Plantation has demonstrated a sufficient stake in the outcome of this proceeding to establish standing. The following findings support standing:

1. Plantation is an existing provider of NICU services in the district.

   
   

2. Plantation is the second closest district provider to Memorial West, the closest being the overutilized program at Hollywood Memorial.

   
   

3. Broward has experienced recent shortages in qualified nurses to staff NICU beds.

4. Plantation's secondary service area extends into Memorial West's primary service area.

   
   

5. Six obstetricians have privileges at both Memorial West and Plantation. The exception is granted.

EXCEPTIONS FILED BY

SOUTH BROWARD HOSPITAL DISTRICT

Counsel requests that paragraph 41 of the Recommended Order be corrected where it identifies the geographic area as southwest Broward County. Having reviewed the testimony of the relevant witness it is clear that the area identified was the South Broward Hospital District. The correction is made as requested.

FINDINGS OF FACT

The agency 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 agency 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. 1/

Based upon the foregoing, it is

ADJUDGED, that the application of South Broward Hospital District for CON 7249 be APPROVED.

DONE and ORDERED this 15th day of June, 1995, in Tallahassee, Florida.

Douglas M. Cook, Director Agency for Health Care

Administration

ENDNOTE

1/ Official notice is taken that in a subsequent batching cycle, the agency issued its intent to approve CON 7877 for a 10 bed, Level II NICU service at Memorial West on the basis of "not normal" circumstances; the state agency action report dated December 5, 1994; letter of transmittal to South Broward Hospital District dated January 9, 1995. Health Quest Realty vs. Department of Health and Rehabilitative Services, 477 So 2d 576, 577, footnote 3, (Fla. 1st DCA 1985). Plantation General's challenge to the approval of CON 7877 is pending at the Division of Administrative Hearings, Case Number 95-0744.

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, 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:

R. Terry Rigsby, Esquire BLANK, RIGSBY & MEENAN, P. A.

204 South Monroe Street Tallahassee, Florida 32302

Samuel Dean Bunton, Esquire Senior Attorney, Agency for Health Care Administration

325 John Knox Road

Atrium Building, Suite 301 Tallahassee, Florida 32303-4131

Jeffrey L. Prehn, Esquire

RADEY, HINKLE, THOMAS & McARTHUR

101 North Monroe Street, Suite 1000 Post Office Drawer 11307 Tallahassee, Florida 32302

James W. York Hearing Officer

The DeSoto Building 1230 Apalachee Parkway

Tallahassee, Florida 32399-1550 Elizabeth Dudek (AHCA/CON) Alberta Granger (AHCA/CON)

Elfie Stamm (AHCA/CON)

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished to the above named addresses by U.S. Mail this 15th day of June, 1995.

R. S. Power, Agency Clerk State of Florida, Agency for Health Care Administration

325 John Knox Road

The Atrium Building, Suite 301 Tallahassee, Florida 32303

(904) 922-3808

Docket for Case No: 93-004881CON

Orders for Case No: 93-004881CON