STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ENGLEWOOD COMMUNITY HOSPITAL, ) INC. d/b/a ENGLEWOOD COMMUNITY ) HOSPITAL, )

)

Petitioner, )

vs. ) CASE NO. 94-3772

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

and )

) SARASOTA COUNTY PUBLIC HOSPITAL ) BOARD, d/b/a SARASOTA MEMORIAL ) HOSPITAL, and VENICE HOSPITAL, ) INC., )

)

Intervenors. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Susan B. Kirkland, held a formal hearing in this case on January 30 - February 3, 1995, in Tallahassee, Florida.

APPEARANCES

For Petitioner: John D. C. Newton, II, Esquire

Messer, Vickers, Caparello, Madsen & Goldman, P.A.

215 South Monroe Street, Suite 701 Post Office Box 1876

Tallahassee, Florida 32302

For Respondent: Richard Patterson, Esquire

Assistant General Counsel

Agency for Health Care Administration 2727 Mahan Drive, Building 3

Tallahassee, Florida 32308

For Intervenor, Robert A. Weiss, Esquire Sarasota County John M. Knight, Esquire

Public Parker, Hudson, Raider, & Dobbs Hospital Board: The Perkins House

118 North Gadsden Street Tallahassee, Florida 32301

For Intervenor, Stephen K. Boone, Esquire Venice Hospital, 1001 Avenida Del Circo Inc.: Post Office Box 1596

Venice, Florida 34284 STATEMENT OF THE ISSUES

Whether the application for a certificate of need filed by Englewood Community Hospital, to establish an adult inpatient cardiac catheterization program in District 8 meets the statutory and rule criteria for approval.

PRELIMINARY STATEMENT

Petitioner, Englewood Community Hospital, Inc., d/b/a Englewood Community Hospital (Englewood), filed a letter of intent to submit a Certificate of Need (CON) application, CON No. 7663, to establish and operate an adult inpatient cardiac catheterization laboratory. On July 6, 1994, the Respondent, Agency for Health Care Administration (Agency), issued a letter of intent to deny Englewood's application on the basis that Englewood had already been granted a CON to operate an inpatient cardiac catheterization laboratory. Englewood requested an administrative hearing. The case was referred to the Division of Administrative Hearings for assignment to a hearing officer.

The case was scheduled for hearing on September 19-23, 1994. On August 2, 1994, Sarasota County Public Hospital Board, d/b/a Sarasota Memorial Hospital (Memorial) filed a Petition to Intervene. An order was entered August 11, 1994, granting Memorial's petition to intervene. On August 8, 1994, the Agency issued a Notice of Change of Agency Position, stating that the Agency was now supporting the approval of the CON application filed by Englewood, CON No. 7663. On August 17, 1994, Venice Hospital, Inc. (Venice) filed a Petition to Intervene, which was granted by order dated August 29, 1994. On September 6, 1994, Petitioner filed an Agreed Motion for Continuance. The motion was granted and the final hearing was rescheduled for January 31-February 3, 1995.

At the final hearing Petitioner presented the following witnesses: Marilyn Zitzke, Jane Piehler, Jennifer Kluge, Dr. Danton DeGuia, Todd Chase, Jack Baron, Scott Hopes, Daniel Sullivan, and Alan Behr. Petitioner's Exhibits 1-11, 13A, 13B, and 15-20 were admitted in evidence. Respondent presented Elizabeth Dudek as its witness. Respondent's Exhibits 1-4 were admitted in evidence.

Intervenor Sarasota Memorial presented the following witnesses: Carl David Ross, Lynn Sanden, Dr. Jay Midwall, and Mark Richardson. Sarasota Memorial's Exhibits 1-3 were admitted in evidence. Venice presented the following witnesses: Roy Hess, Laree BeBee and Rick Knapp. Venice's Exhibits 1 and 4-7 were admitted in evidence.

At the final hearing, the parties agreed to file proposed recommended orders by April 10, 1995. On March 31, 1995, Sarasota Memorial filed a Motion for Extension of Time to File Proposed Recommended Orders. The motion was granted and the time for filing proposed recommended orders was extended to May 23, 1995. On May 18, 1995, Sarasota filed an agreed motion for extension of time to filed proposed recommended orders. The motion was granted and the time for filing was extended to May 31, 1995. On May 30, 1995, Petitioner filed an agreed motion for extension of time. The motion was granted and the time for filing proposed recommended orders was extended to June 7, 1995. On June 7, 1995, Petitioner filed another agreed motion for extension of time. The motion was granted and the time for filing proposed recommended orders was extended to June 9, 1995. On June 9, 1995, Respondent filed a motion for extension of time

and on June 13, 1995, Petitioner filed an agreed motion for extension of time. The motions were granted and the time for filing proposed recommended orders was extended to June 15, 1995.

Intervenors filed their joint proposed recommended order on June 9, 1995.

Respondent did not file a proposed recommended order. Petitioner filed a proposed recommended order on June 20, 1995, along with a motion to accept late filed proposed recommended order. No objections were filed to the granting of the motion, and it was granted. The parties' proposed findings of fact are addressed in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. THE PARTIES

   
   

   1. Petitioner, Englewood Community Hospital, Inc., d/b/a Englewood Community Hospital (Englewood), is a 100 bed general acute care hospital located in Englewood, Florida.

      
      

   2. Englewood is owned and operated by Columbia/HCA Health Care (Columbia), a for-profit corporation.

      
      

   3. Englewood operates an outpatient cardiac catheterization laboratory in a mobile unit located in the hospital parking lot. Patients and some physicians have been reluctant to use the mobile unit.

      
      

   4. Venice Hospital, Inc. (Venice) is a not-for-profit, community owned hospital with 342 beds. Venice operates an inpatient cardiac catheterization laboratory for invasive cardiac diagnostic procedures. Venice has unsuccessfully applied twice for a certificate of need (CON) to provide open heart surgery.

      
      

   5. The Sarasota County Public Hospital Board (Sarasota Hospital Board) is a publicly elected, nine member organization, which is responsible for the operation and oversight of Sarasota Memorial Hospital (Memorial). Memorial is a 952 bed hospital with services including inpatient cardiac catheterization and open heart surgery. Memorial is located in Sarasota, Florida.

      
      

   6. Englewood, Venice, and Memorial are all located in Sarasota County which is in the Agency for Health Care Administration Planning District 8. There are nine other inpatient cardiac catheterization programs in District 8. The existing inpatient cardiac catheterization programs are distributed as follows: Sarasota County (3); Charlotte County (3); Lee County (4); Collier County (1).

      
      

   7. Respondent, Agency for Health Care Administration (Agency), is the state agency which administers CON laws in Florida. The Agency published on February 4, 1994, a fixed need pool projection for inpatient cardiac catheterization procedures, showing a need for three additional programs in District 8 for the batch in which Englewood's application was reviewed. This calculation counted an earlier application of Englewood as approved.

      
      

2. THE PROJECT

   
   

   1. Englewood proposes to establish an adult inpatient cardiac catheterization laboratory, placing inside the hospital facility the equipment

      which is currently located in its mobile cardiac catheterization laboratory. Englewood timely filed the letter of intent, CON application, and response to omissions for CON Number 7663.

      
      

   2. The Agency originally denied the application because a previous application by Englewood for inpatient cardiac catheterization services had been granted. The previous application proposed to keep the equipment in the mobile unit and build a walkway from the mobile unit to the hospital facility. Englewood withdrew its application for the previous application.

      
      

   3. The Agency has filed an official notice of changing its position to support Englewood's CON Application Number 7663.

      
      

3. NEED FOR THE PROJECT IN RELATION TO THE LOCAL AND STATE HEALTH PLANS

   
   

   1. The 1993 Florida State Health Plan provides four allocation preferences relevant to the review of the certificate of need applications to establish adult inpatient cardiac catheterization programs.

      
      

      1. Preference shall be given to an applicant who proposes the establishment of both cardiac catheterization services and open heart surgical services provided that a need for

         open heart surgery is indicated.

      2. Preference shall be given to an applicant proposing to establish a new cardiac catheterization program if the applicant can demonstrate that patients are currently seeking cardiac catheterization services outside the respective county or HRS district.

      3. Preference shall be given to hospitals with a history of providing a disproportionate share of charity care and Medicaid patient days in the respective acute care subdistrict. Qualifying hospitals shall meet Medicaid disproportionate share criteria.

      4. Preference shall be given to an applicant who agrees to provide services to

         all patients regardless of their ability to pay.

         
         

         Englewood has projected that charity and indigent care for cardiac catheterizations at less than 1.0 percent of total revenue. Given Englewood's past history, 1.0 percent of total revenue is a gross overstatement. At the final hearing, Englewood stated that it would not agree to condition the CON on Englewood providing charity and indigent care equal to 1.0 percent of the total revenue. The Agency's 1992 Hospital Financial Data showed that Englewood's reported charity and uncompensated care was approximately .09 percent and .06 percent of total revenues for fiscal years 1992 and 1993, respectively.

         
         

   2. Englewood has agreed to provide adult cardiac catheterization services to anyone in need without ability to pay; thus, Englewood is entitled to a partial preference for providing services to patients regardless of their ability to pay. Englewood has not demonstrated that it should receive a preference for the other three factors.

   3. The 1993 District 8 Allocation Factors Report addresses the following preferences relevant to the review of certificate of need applications to establish adult inpatient cardiac catheterization services.

      
      

      1. Preference shall be given to applicat- ions for new or expanded cardiac catheterization services that clearly indicate the impact of

         the proposed services on other health providers offering similar services in the same area.

      2. Preference shall be given to applicants which agree to provide services to all patients, regardless of their ability to pay.

         
         

   4. Englewood has agreed to provide services to all patients without ability to pay and is entitled to a partial preference for the second factor in the district plan.

      
      

4. AVAILABILITY, QUALITY OF CARE, EFFICIENCY, APPROPRIATENESS, ACCESSIBILITY, EXTENT OF UTILIZATION, AND ADEQUACY OF LIKE EXISTING HEALTH CARE SERVICES IN THE SERVICE DISTRICT.

   
   

   1. Englewood's proposed inpatient cardiac catheterization program would not adversely affect the quality of care provided by the cardiac catheterization programs at Sarasota Memorial Hospital and Venice Hospital.

      
      

   2. Memorial has a comprehensive cardiac catheterization program. It operates three dedicated cardiac catheterization laboratories. The Memorial laboratories provide diagnostic catheterizations as well as all available therapeutic catheterization techniques.

      
      

   3. Prior to performing a diagnostic catheterization, cardiologists are able to determine with a high degree of confidence and reliability whether a patient with cardiovascular disease will require, during a particular hospitalization, therapeutic intervention, e.g. angioplasty or open heart surgery. Cardiologists rely on an array of sophisticated non-invasive diagnostic tests in making such determinations.

      
      

   4. When a cardiologist determines that a patient is not sufficiently ill to require therapeutic intervention, the patient will customarily receive a diagnostic catheterization on an outpatient basis. During the last several years, there has been a shift in Sarasota County from inpatient catheterization to outpatient catheterization. In fact, the Medicare program requires that Medicare patients receive outpatient catheterization, unless a patient's medical condition requires inpatient care.

      
      

   5. Normally only patients with unstable medical conditions receive inpatient cardiac catheterization. That group of patients is likely to require therapeutic intervention during the same hospital admission to resolve their medical problems.

      
      

   6. Between 80 to 90 percent of patients who receive inpatient cardiac catheterization receive therapeutic intervention during the same hospital admission.

      
      

   7. If an unstable patient presents at a facility which lacks the capability to perform therapeutic intervention, it is in the best medical

      practice to stabilize the patient and then transfer the patient to a facility which can perform both the diagnostic catheterization and the therapeutic intervention.

      
      

   8. If the unstable patient requires intervention in the form of angioplasty, it is in the patient's best interest to receive both the diagnostic and therapeutic procedures during a single visit to the cardiac catheterization laboratory. The provision of both procedures in one visit enhances comfort, safety, and efficiency. It is Memorial's practice to provide both types of services in one visit to the catheterization laboratory when possible.

      
      

   9. Adult inpatient cardiac catheterization programs are available within a maximum automobile travel time of one hour, under average travel conditions, for at least 90 percent of District 8's population.

      
      

   10. The Sarasota Hospital Board's policy is to provide cardiac catheterization services at Memorial to all residents without regard to their ability to pay. In its most recently completed fiscal year at the time of the final hearing, the Sarasota Hospital Board provided $268,000 of charity care and

       $720,000 of Medicaid care, related to cardiac catheterization patients.

       
       

   11. In its application, Englewood stated: "There is no evidence to indicate that the efficiency, appropriateness and adequacy of adult inpatient cardiac catheterizations services in District VIII are less than adequate."

       
       

   12. Each of the seven hospitals in Sarasota and Charlotte Counties, with the exception of Englewood, operate an adult inpatient cardiac catheterization laboratory. There is excess capacity at the existing cardiac laboratories in Sarasota and Charlotte Counties. A single cardiac catheterization laboratory can safely perform approximately 1500 cases annually.

       
       

   13. Three of the existing cardiac catheterization laboratories in Sarasota and Charlotte Counties operate a volume between 300-400 cases annually:

       Fawcett, St. Joseph's, and Doctors'. Fawcett is owned and operated by Columbia.

       
       

   14. Venice operates the existing laboratory closest to Englewood.

       Venice's catheterization laboratory has the capacity to perform 1,500 procedures annually. Over the last five years, the number of cases has grown from 500 to approximately 800, where it has leveled off, leaving almost half the laboratory's capacity unused.

       
       

   15. Venice's catheterization laboratory is available and accessible to Englewood residents. The catheterization laboratory at Venice has been serving Englewood patients and will continue to do so. Venice currently serves a significant share of the market in three of the six zip codes identified by Englewood as its service area.

       
       

   16. There is adequate capacity at the existing laboratories in Charlotte and Sarasota Counties to treat the existing volume of cardiac catheterization patients, as well as the volume that Englewood proposes to serve.

       
       

   17. Patients in the Englewood area will not experience serious problems in obtaining inpatient cardiac catheterization services in the absence of Englewood's proposed program. Under these circumstances it is more appropriate and less expensive to the health care system as a whole to fully utilize existing catheterization laboratories.

5. ABILITY OF APPLICANT TO PROVIDE QUALITY CARE AND APPLICANT'S RECORD OF PROVIDING QUALITY OF CARE

   
   

   1. Englewood has a record of providing appropriate quality of care to its patients.

      
      

   2. Englewood is fully accredited by the Joint Commission on Accreditation of Health Care Organizations.

      
      

   3. Englewood submitted a written protocol for transfer of emergency patients to a hospital providing open heart surgery within 30 minutes travel time by emergency vehicle under average travel conditions as part of its application.

      
      

   4. Englewood's cardiac catheterization program policies and procedures manual is appropriate.

      
      

   5. The equipment which Englewood proposes for its inpatient cardiac catheterization laboratory was purchased from Southwest Florida Regional Medical Center in Fort Myers, Florida, where it had been used successfully for approximately one year. The equipment is currently being used in Englewood's outpatient cardiac catheterization laboratory.

      
      

   6. The equipment uses analog imaging, and includes video playback to allow instant review. Digital imaging is newer technology than analog imaging and allows the image of the cardiac areas to be magnified, processed and measured while the physician is performing the catheterization. Regardless whether analog or digital imaging is used the physician will rely on a 35mm film which is made during the catheterization procedure to make the diagnosis. The digital imaging equipment is more expensive than the analog imaging equipment. Although, digital imaging is nice to have, it is not necessary to provide quality cardiac catheterization services.

      
      

   7. Englewood has plans to move the outpatient cardiac catheterization laboratory from the mobile unit to inside the hospital facilities. As of the date of the final hearing, Englewood had not begun construction of this project to relocate the outpatient laboratory. The cost of renovating space for the cardiac catheterization laboratory and moving the equipment inside is estimated to be $400,000.

      
      

   8. Two or three people are required to assist the physician perform an inpatient cardiac catheterization. One person circulates, moving outside the sterile area surrounding the procedure table to get medications, log information and generally oversee and monitor the patient's condition. The staff should include cardiovascular technicians, who may be but do not have to be nurses.

   9. Englewood proposes the following staffing and salary:

      
      

      	FTE'S	YEAR 1 HOURLY RATE	SALARIES	FTE'S	YEAR 2 HOURLY RATE	SALARIES
      RNS	3.0	19.92	118,061	5.0	19.68	204,672
      Nurse Manager	1.0		0	1.0		0
      Cath Lab Tech	2.0	14.43	60,029	2.0	15.01	62,442
      Subtotal	6.0		178,090	8.0		267,114
      Lab Director	1.0		0	1.0		0
      Subtotal	1.0		0	1.0		0
      Unit Secretary	0.5	7.96	8,278	1.0	8.28	17,222
      Subtotal	0.5		8,278	1.0
      TOTAL	7.5		186,368	10.0		284,336

      
      

   10. The radiology technician's job is to assist with quality assurance, help maintain and oversee the equipment, and monitor safety. The radiology technician does not have to be present in the laboratory during procedures. Englewood already employs a radiology technician in its radiology department. This technician has had training for cardiac catheterization laboratory duties.

       
       

   11. Dr. DeGuia currently performs the duties of a medical director and will continue to do so if the inpatient laboratory is established.

       
       

   12. The nurse manager who is currently employed as the nursing manager for the intensive care, progressive care and outpatient will be utilized in the inpatient laboratory as well.

       
       

   13. The staff will be cross trained in each position's functions. Englewood will have the assistance of Fawcett Memorial Hospital and Southwest Heart Institute in staffing and training when needed.

       
       

   14. Englewood's proposed staffing will provide an adequate number of properly trained personnel.

       
       

   15. The salaries Englewood proposes to pay its staff are reasonable and competitive.

       
       

6. UTILIZATION

   
   

   1. In its application, Englewood projects that the first year of operation of the inpatient laboratory, there will be a total of 236 cardiac catheterizations performed consisting of 132.9 inpatients and 103.1 outpatients. In the second year of operation, Englewood projects the total cardiac catheterizations to be 345 with 194.3 being inpatient and 150.7 being outpatient.

   2. Englewood has included six specific zip code in its service area. Based on Englewood's experience with MDC 05 diagnoses1, Englewood's expert witness Scott Hopes opined that Englewood's market share for diagnostic cardiac catheterization services would be as follows:

      
      

      ZIPCODE MARKET SHARE

      33947 53.1 percent

      33981 43.8 percent

      34223 50 percent

      34224 65.2 percent

      34287 6.4 percent

      34293 2.0 percent

      
      

   3. In order to project inpatient utilization of the Englewood laboratory, it is appropriate to rely upon the historical pool of patients in the Englewood service area who have received inpatient catheterization during a hospital admission, without receiving angioplasty or open heart surgery during that admission. Englewood proposes to serve primarily "low risk" inpatients who are not expected to require intervention during that hospital admission.

      
      

   4. For the period July 1991 through June 1992, there were 490 inpatient cardiac catheterizations performed on patients residing in Englewood's service area. For the period July 1992 through June 1993, there were 479 inpatient cardiac catheterizations performed on patients in the same service area.

      
      

   5. In its application, Englewood applied an aggregate market share to the total number of inpatient cardiac catheterizations performed on the residents of the proposed service area. This method distorts the projected number of inpatient procedures which could be performed by Englewood because of the variability of the market shares in each zip code. Based on the method employed in Englewood's application, Englewood would have performed 145 and 160 inpatient cardiac catheterizations in the 1991-1992 and 1992-1993 periods, respectively. When one applies the actual market share by zip code to the actual number of procedures performed on patients from each zip code, a more accurate projection based on historical data can be made as shown in the chart below.

      
      

      ZIP CODE	MARKET SHARE	1991-1992 CATHS	ENGLEWOOD SHARE	1992-1993 CATHS	ENGLEWOOD SHARE
      33947	53.1 percent	21	11	18	10
      33981	43.8 percent	35	15	29	12
      34223	50.0 percent	68	34	72	36
      34224	65.2 percent	42	27	34	22
      34287	6.4 percent	145	9	146	9
      34293	2.0 percent	179	4	180	4
      			100		93

      
      

   6. Englewood performed 50 outpatient cardiac catheterizations in 1994. This low utilization is based on the physical location of the outpatient facility in the hospital parking lot and the lack of marketing. Fifty procedures is not a representative number of the outpatient procedures which Englewood could expect if the laboratory was located inside the hospital and the program was marketed effectively.

      
      

   7. The application states that in 1992 the percentage of inpatient cardiac catheterization procedures of the total cardiac catheterizations performed in hospitals with an inpatient program in District 8 was 56.33 percent.2 Thus based on Englewood's market share by zip code, the total amount

      of cardiac catheterizations which Englewood could have expected in 1991-1992 and 1992-1993 would have been 177 and 165, respectively.

      
      

   8. In its application, Englewood uses three different methodologies to project the number of cardiac catheterizations Englewood could expect during its first and second year of operation. Method 1 (pgs. 28 and 32 of the Response to Omissions) subtracts the amount of catheterizations Englewood would have expected in 1991-1992 from the amount it would have expected in 1992-1993 and increases the projection each year by this amount to project the number of catheterizations for the first two years of operation. Using Method 1 would result in a decrease in the number of cardiac catheterizations each year because the number of cardiac catheterizations declined by 12 procedures from 1991-1992 to 1992-1993.

      
      

   9. Method 2 (pgs. 30 & 32 of the Response to Omissions) employs an annual increase of 8 percent. This increase is the lowest annual percentage increase of cardiac catheterizations in District 8 from October 1987 to September 1993. Using this method would result in a projection of 208 procedures for 1996 and

      224 procedures for 1997.

      
      

   10. Method 3 (pgs. 31 & 32 of the Response to Omissions) uses a 12.78 percent annual increase based on the average annual percentage increase of cardiac catheterizations in District 8 from October 1987 to September 1993. Using this method would result in a projection of 237 procedures for 1996 and

       267 procedures for 1997.

       
       

   11. Using any of the three methods to project the number of procedures to be performed in the second year, Englewood will not perform a minimum of 300 catheterization procedures by the end of the second year of operation of the inpatient laboratory.

       
       

   12. The Intermedic Health Center is a large multi-specialty group with a five cardiologist heart group based in Port Charlotte. Intermedic has offices in Englewood. The heart group was to begin regular office schedules in Englewood in February, 1994. The group plans to recruit one or two additional physicians to staff the office.

       
       

   13. At the time of final hearing the physicians of Intermedic's heart group performed cardiac catheterizations at hospitals other than Petitioner's because some of the cases were inpatient and some of their outpatients were uncomfortable with a portable laboratory. For 1995, Intermedic projected 90 to

       100 cases; thereby resulting in some increase in business with Englewood relating to cardiac catheterizations.

       
       

   14. The population in the Englewood service area consists of a large number of residents who are 65 or older. This segment of the population is more likely to have a high demand for cardiac catheterization than a younger segment of the population. The 65 or older category is a fast growing part of the population in the Englewood service area.

       
       

7. IMMEDIATE AND LONG-TERM FINANCIAL FEASIBILITY OF THE PROGRAM

   
   

   1. Englewood has the financial ability to fund the construction of the project.

   2. The pro forma statement contained in the CON application is flawed. Englewood has double counted a profit layer that it is already enjoying from inpatients that it transfers to an inpatient catheterization provider. Englewood does not account for the contribution margin attaching to Englewood's inpatient portion of their care before transfer.

      
      

   3. In projecting its revenues from outpatient utilization, Englewood has included in its figures outpatient catheterizations it would perform whether or not its application is approved rather than basing their pro forma on the incremental difference attributable to approval of an inpatient program.

      
      

   4. The projected revenues contained in the pro forma are suspect. First, the proposed procedure charges shown on the outpatient service revenues page of Englewood's application are high. It is unusual to find outpatient procedure charges that are higher than the inpatient procedure charges.

      
      

   5. In Table 7 in the application, Englewood asserts that patient days for Medicaid and private pay will net the highest revenues per patient day. Typically those two payor sources are at the bottom of the list of revenue producers than the top.

      
      

   6. Englewood's pro forma understates revenue deductions by assuming Medicaid and private pay reimbursement that is unrealistic and by failing to take into account anticipated growth in managed care. Englewood's financial expert agreed that managed care will see significant growth over the next five years. Because the pro forma overstates net revenue, it understates revenue deductions.

      
      

   7. Englewood has understated expenses. The marginal cost per case is understated, relocation expenses are understated, and the nurse manager's time is not allocated to the expense side of the pro forma. The State Agency Action Report also calls into question the adequacy of the expenses in Englewood's pro forma.3

      
      

   8. Based on the flawed pro forma, Englewood has not demonstrated that the project is financially feasible.

      
      

8. OTHER STATUTORY CRITERIA

1. The costs and methods of the proposed construction, including consideration of the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction are reasonable.

   
   

2. The proposed design of Englewood's inpatient cardiac catheterization laboratory is reasonable and appropriate.

   
   

3. Englewood submitted the list of capital projects required by Section 408.037(2)(a) and (b), Florida Statutes (1993); the audited financial statements required by Section 408.037(3), Florida Statutes (1993); and the resolution required by Section 408.037(4), Florida Statutes (1993).

   
   

   I. STANDING OF VENICE AND MEMORIAL

   
   

4. If Englewood were to establish an inpatient cardiac catheterization laboratory, both Venice and Memorial would have patients diverted from their programs to Englewood's.

5. Based on the projections contained in Englewood's application, Venice would lose 82 catheterization procedures in the second year of operation of Englewood's proposed program, resulting in a net profit lose of $234,000. Although Englewood's application projections are inaccurate, the application does contemplate that Venice would lose procedures as a result of the implementation of Englewood's proposed program.

   
   

6. In order for Englewood to reach its projected volume of procedures, approximately 40 to 50 procedures would have to be redirected annually from Memorial to Englewood. There is also a strong potential that Memorial would lose angioplasty and open heart surgery cases as well.

   
   

7. Southwest Florida Regional Medical Center (SWFRMC), in Fort Myers, is owned by Columbia. It is a tertiary cardiovascular referral center for other Columbia hospitals in Southwest Florida.

   
   

8. The development of an inpatient cardiac catheterization laboratory at Englewood would assist in the development of referral patterns from the Englewood area to SWFRMC for angioplasty and open heart surgery. It would be in Columbia's interest to encourage utilization of SWFRMC's cardiovascular services by patients residing in the Southwest Florida area.

CONCLUSIONS OF LAW

1. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Sections 120.57(1), and 408.039(5), Florida Statutes.

   
   

2. Englewood Community Hospital, as the applicant, has the ultimate burden of persuasion to demonstrate its entitlement to the certificate of need under the relevant statutory and rule criteria. Boca Raton Artificial Kidney Center, Inc. v. HRS, 475 So.2d 260 (Fla. lst DCA 1985); Florida Department of Transportation v. J.W.C., Inc., 396 So.2d 788, 789 (Fla. 1st DCA 1981). No single criterion is necessarily determinative. The purpose behind the certificate of need law is to provide for a "balanced consideration of all relevant criteria." Balsam v. Department of Health and Rehabilitative Services,

   485 So.2d 361 (Fla. 1st DCA 1984) and Department of Health and Rehabilitative Services, v. Johnson & Johnson Home Health Care, Inc., 447 So.2d 361 (Fla. 1st DCA 1984). "[T]he appropriate weight to be given to each individual criterion contained in the statute regarding CON applications is not fixed, but rather must vary on a case-by-case basis, depending on the facts in each case." North Ridge General Hospital, Inc. v. NME Hospitals, Inc., 478 So.2d 1138, 1139 (Fla. 1st DCA 1985), quoting from Collier Medical Center, Inc. v. Department of Health and Rehabilitative Services, 462 So.2d 83 (Fla. 1st DCA 1985).

   
   

3. Both Venice and Memorial have established their standing to participate in these proceedings. They are existing providers of adult inpatient cardiac catheterization services in District 8. They both serve patients who, if Englewood's application is granted, could receive services at either their facilities or Englewood. Baptist Hospital, Inc. v. Department of Health and Rehabilitative Services, 500 So.2d 620, 625 (Fla. 1st DCA 1986). See also Naples Community Hospital v. Agency for Health Care Administration, Case No. 93-4888 (DOAH, July 26, 1994).

   
   

4. Section 408.035(1), Florida Statutes (1993), sets forth the criteria that the agency shall use in reviewing an application for a certificate of need

   for health care facilities and services. The parties have stipulated that the following subsections of Section 408.035(1) are not applicable to this proceeding: 408.035(1)(d), (e), (f), (g), (h), (j), (k), (l), (m), and (n).

   The remaining provisions of Section 408.035(1) provide:

   
   

   1. The agency shall determine the reviewa- bility of applications and shall review applications for certificate-of-need determina- tions for health care facilities and services,

      hospices, and health maintenance organiza- tions in context with the following criteria:

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

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

      3. The ability of the applicant to provide quality of care and the applicant's record of providing quality of care.

         * * * *

         (i) The immediate and long-term financial feasibility of the proposal.

         * * * *

         (o) The applicant's past and proposed provision of services which promote a continuum of care in a multilevel health care system, which may include, but is not limited to,

         acute care, skilled nursing care, home health care, and adult congregate living facilities.

         
         

5. The Agency has determined that there is a need for additional inpatient cardiac catheterization laboratories in District 8, and this determination is unchallenged. Englewood has failed to demonstrate that it meets the state health plan preference for disproportionate share providers, providers proposing open heart surgery, and providers proposing a service in a county in which the service is not available. Englewood did establish a preference for providers proposing to serve all patients without regard to their ability to pay.

   
   

6. Englewood has established a preference under the District 8 plan for providers proposing to serve all patients without regard to their ability to pay.

   
   

7. In relation to the criteria in Section 408.035(1)(b), Florida Statutes, the evidence establishes that the availabilty, quality of care, efficiency, appropriateness, accessibility, extent of utilization and adequacy of adult inpatient cardiac catheterization services in District 8 is adequate.

   
   

8. The evidence establishes that the quality of care proposed to be provided by Englewood is adequate.

9. Englewood has failed to establish the long term financial feasibility of the project. The pro forma in the application is flawed and cannot be relied on to accurately project the long term financial feasibility of the project.

   The utilization projections relied on by Englewood for the first two years of operation are overstated.

   
   

10. Rule 59C-1.032, Florida Administrative Code, sets forth the requirements for establishment of inpatient cardiac catheterization services. The parties have stipulated that the following subsections of Rule 59C-1.032 are not at issue in this proceeding: 59C-1.032(6)(b) and 59C-1.032(6)(c).

    
    

11. The parties have stipulated that Englewood fulfills the requirements of the following subsections of Rule 59C-1.032, Florida Administrative Code: 59C-1.032(5)(a) and 59C-1.032(6)(a).

    
    

12. The parties have stipulated that the travel requirements of Rule 59C- 1.032(4)(a) are presently met.

    
    

13. Rule 59C-1.032(8)(b), Florida Administrative Code provides:

    
    

    Applicants shall demonstrate that they will be able to reach an annual program volume of

    300 admissions within 2 years after the program becomes operational.

    
    

14. Englewood will not reach an annual program volume of 300 admissions within 2 years after the program becomes operational.

    
    

15. The parties have stipulated that Englewood fulfills the requirements of the following sections of Florida Statutes (1993): 408.037(2)(a) and (b); 408.037(3); and 408.037(4).

    
    

16. On balance, the evidence does not support a conclusion that Englewood should be granted a CON for an adult inpatient cardiac catheterization laboratory. Englewood will not be able to perform 300 procedures a year by the end of the second year of operation of the program. Englewood has not established the long term financial feasibility of the program. The services presently being provided in District 8 are adequate to meet the needs of the Englewood residents. The current providers are operating at less than full capacity and it will be less costly to meet the need for inpatient cardiac catheterization services in District 8 by utilizing the existing capacity of the other inpatient laboratories.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying the application of

Englewood Community Hospital, Inc., d/b/a Englewood Community Hospital's for

Certificate of Need 7663 to establish an adult inpatient cardiac catheterization program.

DONE AND ENTERED this 18th day of December, 1995, in Tallahassee, Leon County, Florida.

SUSAN B. KIRKLAND, 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 18th day of December, 1995.

ENDNOTES

1/ MDC 05 diagnoses are diseases and disorders of the circulatory system. Englewood excluded DRG;s 103-108, 112, 117, 124 and 125 from the final count in determining the market share because those DRG's represent procedures which Englewood cannot perform (open heart, angioplasty, pacemaker revision and impatient catheterization).

2/ This percentage is not inconsistent with Venice's percentage of 40 to 50 of inpatient procedures to total catheterizations.

3/ The State Agency Action Report indicated the project was partially financially feasible because of the projected number of procedures to be performed during the first and second year. However, those projections are overstated.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-3772

To comply with the requirements of Section 120.59(2), Florida Statutes (1993), the following rulings are made on the parties' proposed findings of fact:

Petitioner's Proposed Findings of Fact.

1. Paragraphs 1-15: Accepted.

2. Paragraphs 16-19: Accepted in substance.

3. Paragraph 20: The first sentence is rejected as constituting argument. The second and third sentences are accepted in substance. The fourth sentence is accepted in substance as far as it relates to the construction of the project but the evidence did not establish that the project was financially feasible on a long term basis.

4. Paragraph 21: Rejected as subordinate to the facts found.

5. Paragraph 22: The first sentence is accepted in substance. The remainder is rejected as unnecessary.

6. Paragraph 23: Rejected as unnecessary.

7. Paragraph 24: Accepted in substance.

8. Paragraphs 25-26: Rejected as constituting argument.

9. Paragraph 27: The first and third sentences are accepted in substance as far as they go. If the patient needs catheterization and intervention, it is better for the patient to have it done in one admission. Rejected as not supported by the greater weight of the evidence.

10. Paragraph 28: Accepted in substance as far as it goes. The evidence also showed that if the patient was unstable and would also need intervention, it was better to stabilize the patient and do both the catheterization and intervention in one visit.

11. Paragraphs 29-32: Accepted in substance.

12. Paragraph 33: Rejected as irrelevant since the application did not use this methodology.

13. Paragraph 34: Accepted in substance.

14. Paragraph 35: Rejected as not supported by the evidence as a reasonable estimation.

15. Paragraph 36: Rejected as not supported by the application.

16. Paragraph 37: Accepted in substance.

17. Paragraph 38: Rejected that the numbers in the application are supported by a trend in 1994 and the increase in cardiologists in the community.

18. Paragraph 39: Accepted in substance.

19. Paragraph 40: Rejected as not being the method that was employed in the application.

20. Paragraph 41: The first sentence is rejected. The reasonable method is to determine Englewood's market share by zip code in the service area. The second sentence is accepted in substance. Rejected as based on unreasonable methodology. The remainder is accepted in substance.

21. Paragraph 42: Accepted in substance that the Englewood community needs cardiac catheterization but rejected

    that it needs to have it provided on an inpatient basis.

22. Paragraphs 43-45: Rejected as not supported by the evidence.

23. Paragraphs 46-49: Accepted in substance.

24. Paragraph 50-52: Rejected as subordinate to the facts found.

25. Paragraphs 53-61: Accepted in substance.

26. Paragraphs 62: Rejected as subordinate to the facts found.

27. Paragraph 63: Accepted in substance as it relates to construction costs.

28. Paragraph 64: Rejected as unnecessary.

29. Paragraphs 65-66: Rejected as not supported by the greater weight of the evidence.

30. Paragraphs 67-73: Accepted in substance.

31. Paragraph 74: Rejected as unnecessary.

32. Paragraphs 75-76: Accepted in substance.

33. Paragraph 77: Rejected as unnecessary.

34. Paragraph 78: The first sentence is accepted in substance. The remainder is rejected as unnecessary.

35. Paragraph 79-80: Accepted in substance.

36. Paragraphs 81-82: Rejected as unnecessary.

37. Paragraph 83: The first two sentences are accepted in substance. The last sentence is rejected as unnecessary.

38. Paragraph 84: Rejected as unnecessary.

39. Paragraph 85: Accepted in substance.

40. Paragraphs 86-87: Rejected as subordinate to the facts found.

41. Paragraphs 88-90: Rejected as not supported by the record.

42. Paragraph 91: Accepted in substance.

43. Paragraph 92: Rejected as unnecessary.

44. Paragraph 93: Accepted in substance.

45. Paragraph 94: The first sentence is rejected as not supported by the record. The charges are high. The second sentence is accepted in substance as to the Medicare rate being the same.

46. Paragraphs 95-96: Accepted that Venice and Memorial would maintain over 300 procedures a year. Accepted in substance that the amount of lost procedures is what was projected by Englewood but rejected that is the amount that would be actually lost if Englewood's project were implemented.

47. Paragraph 98: Accepted in substance.

48. Paragraphs 99-101: Rejected as subordinate to the facts found.

49. Paragraph 102: Accepted in substance but rejected to the extent that it implies that there is not adequate transportation available to Memorial and Venice.

50. Paragraph 103: Rejected as not supported by the record.

51. Paragraphs 104-106: Rejected as subordinate to the facts found.

52. Paragraph 107: Rejected as constituting argument and irrelevant given that the Venice and Fawcett are within the maximum travel time allowed.

53. Paragraph 108: Rejected as constituting argument.

54. Paragraph 109: Accepted in substance.

Respondent's Proposed Findings of Fact.

1. The Respondent did not file a proposed recommended order.

Intervenors' Proposed Findings of Fact.

1. Paragraph 1: Accepted in substance.

2. Paragraph 2: The first sentence is accepted. The remainder is rejected as unnecessary.

3. Paragraph 3: Accepted in substance.

4. Paragraph 4: The first two sentences are accepted in substance. The remainder is rejected as unnecessary.

5. Paragraphs 5-8: Rejected as unnecessary.

6. Paragraph 9: The first and third sentences are accepted in substance. The remainder is rejected as unnecessary.

7. Paragraphs 10-11: Accepted in substance.

8. Paragraph 12: Rejected as unnecessary.

9. Paragraph 13: Accepted in substance.

10. Paragraph 14: Rejected as unnecessary.

11. Paragraphs 15-16: Rejected as constituting argument.

12. Paragraph 17: Accepted:

13. Paragraphs 18-30: Accepted in substance.

14. Paragraphs 31-32: Accepted.

15. Paragraphs 32-35: Accepted in substance.

16. Paragraphs 36-37: Rejected as subordinate to the facts found.

17. Paragraphs 38-39: Accepted in substance.

18. Paragraph 40: Accepted in substance except that the residents of Englewood would obviously be able to have easier access to inpatient cardiac catheterization services.

19. Paragraphs 41: Rejected as unnecessary.

20. Paragraphs 42-43: Accepted in substance.

21. Paragraph 44: Rejected as subordinate to the facts found.

22 Paragraph 45: Rejected as not supported by the greater weight of the evidence in light of the fact that quality service can be provided by analog equipment.

1. Paragraphs 46-47: Rejected as subordinate to the facts found.

2. Paragraph 48: Rejected as not supported by the record.

3. Paragraph 49-50: Accepted.

4. Paragraphs 51-56: Accepted in substance.

5. Paragraph 57: The first sentence is rejected. The remainder is rejected as subordinate to the finding that the service area is not overstated.

6. Paragraph 58: Accepted.

7. Paragraphs 59-62: Accepted in substance.

8. Paragraph 63: Rejected as unnecessary.

9. Paragraphs 64-71: Accepted in substance.

10. Paragraph 72: The last sentence is rejected as constituting argument. The remainder is rejected as subordinate to the facts found.

11. Paragraphs 73-75: Rejected as unnecessary

12. Paragraph 76: The first sentence is accepted in substance. The second sentence is rejected as unnecessary.

13. Paragraphs 77-78: Rejected as unnecessary.

14. Paragraphs 79-80: Accepted in substance.

15. Paragraphs 81-83: Rejected as subordinate to the facts found.

16. Paragraph 84: Rejected as irrelevant given the finding that the salaries proposed by Englewood are reasonable.

17. Paragraphs 85-88: Rejected as subordinate to the facts found.

18. Paragraphs 89-92: Accepted in substance.

19. Paragraphs 93-95: Accepted in substance to the extent that Englewood's charges are high.

20. Paragraph 96: Accepted in substance.

21. Paragraph 97: Rejected as subordinate to the facts found and unnecessary in light of the parties' stipulation that Section 408.035(1)(n) was not at issue.

22. Paragraph 98: Accepted in substance.

23. Paragraph 99: The first sentence is accepted in substance. The second sentence is rejected based on the finding that the percentage was reasonable.

24. Paragraphs 100-101: Accepted in substance.

COPIES FURNISHED:

Richard Patterson Senior Attorney

Agency for Health Care Administration

325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131

John D.C. Newton, II, Esquire Messer, Vickers, Caparello Madsen & Goldman

215 South Monroe Street, Suite 701 Tallahassee, Florida 32302

Charles D. Bailey, Jr., Esquire

Williams, Parker, Harrison, Dietz & Getzen 1550 Ringling Boulevard

Post Office Box 3258 Sarasota, Florida 34230-3258

Robert A. Weiss, Esquire John M. Knight, Esquire

PARKER, HUDSON, RAINER & DOBBS

The Perkins House, Suite 200

118 North Gadsden Street Tallahassee, Florida 32301

Stephen K. Boone, Esquire Post Office Box 1596 Venice, Florida 34284

R. S. Power, Agency Clerk

Agency for Health Care Administration 2727 Mahan Drive

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

Tom Wallace Assistant Director

Agency For Health Care Administration 2727 Mahan Drive

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

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 ten 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.

Docket for Case No: 94-003772CON

Orders for Case No: 94-003772CON