STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
ST. JOSEPH'S HOSPITAL, INC., )
)
Petitioner, )
)
vs. )
)
AGENCY FOR HEALTH CARE ) ADMINISTRATION and UNIVERSITY ) COMMUNITY HOSPITAL, INC., )
)
Respondents. )
_____________________________ ) UNIVERSITY COMMUNITY )
HOSPITAL, INC., d/b/a )
UNIVERSITY COMMUNITY )
HOSPITAL, )
)
Petitioner, )
)
vs. )
)
AGENCY FOR HEALTH CARE )
ADMINISTRATION and ST. )
JOSEPH'S HOSPITAL, INC., )
)
Respondents. )
Case No. 02-0456CON
Case No. 02-1097CON
)
RECOMMENDED ORDER
Pursuant to notice, a Final Hearing was held in this case between July 9 through 12, 2002, and July 15 and 16, 2002, in Tallahassee, Florida, before William R. Pfeiffer, a duly- designated Administrative Law Judge of the Division of Administrative Hearings (DOAH).
APPEARANCES
For University Community Hospital, Inc.:
James C. Hauser, Esquire Metz, Hauser & Husband, P.A. Post Office Box 10909
Tallahassee, Florida 32302-2902 For St. Joseph's Hospital, Inc.:
Robert A. Weiss, Esquire Parker, Hudson, Rainer
& Dobbs, LLP
118 North Gadsden Street
The Perkins House, Suite 200 Tallahassee, Florida 32301
For Agency for Health Care Administration:
Michael P. Sasso, Esquire
Agency for Health Care Administration
525 Mirror Lake Drive, North Suite 310-G
St. Petersburg, Florida 33701 STATEMENT OF THE ISSUE
The issue in this cause is whether University Community Hospital's Certificate of Need Application to establish a new, 5-bed Level III neonatal intensive care unit in District 6 should be approved or whether St. Joseph's Hospital's Certificate of Need Application for the addition of 5 Level III beds to its existing Level III neonatal intensive care program in District 6 should be approved.
PRELIMINARY STATEMENT
Pursuant to Section 408.035, Florida Statutes, and Rule 59C-1.042, Florida Administrative Code, a hospital must
acquire Certificate of Need (CON) approval from the Agency for Health Care Administration (AHCA) before it may add any Level III Neo-Natal Intensive Care Unit (NICU) beds. AHCA is responsible for determining the NICU numeric bed need in a service district, evaluating each CON application in relation to specific statutory and rule criteria and approving or denying an applicant.
Following the second CON batching cycle of 2001, AHCA published a numeric need projection of 5 additional Level III NICU beds in District 6 for the January 2004 planning horizon. Shortly thereafter, University Community Hospital (UCH) and St. Joseph Hospital (SJH) submitted their respective CON applications.
After reviewing the applications and applying the relevant statutory and regulatory criteria to each, AHCA's CON office approved UCH and denied SJH. Accordingly, Assistant Secretary Elizabeth Dudek and Secretary Rhonda Meadows ratified the decision.
On February 5, 2002, the Division of Administrative Hearings (DOAH) received notice from AHCA that SJH and UCH had each filed a request for a formal administrative hearing relating to the Agency's decision. Attached to the notice was a copy of each party's petition for a formal administrative proceeding.
SJH's petition challenges AHCA's preliminary denial of its CON Application No. 9493 for the addition of 5 Level III NICU beds to its existing Level III NICU and challenges AHCA's preliminary approval of UCH's CON Application No. 9492 establishing a new 5-bed Level III NICU in District 6.
Conversely, UCH supports AHCA's determination and preliminary approval of its CON application.
Following assignment and consolidation of the cases, final hearing was held in Tallahassee, Leon County, Florida, on July 9 through 12, 2002, and July 15 and 16, 2002. At final hearing, SJH presented the testimony of the following witnesses: Robert Yelverton, M.D., Board-certified in Obstetrics and Gynecology, accepted as an expert in the field of Obstetrical Medicine; Mr. Michael D. Aubin, Administrator and Chief Operating Officer of Tampa Children's Hospital at St. Joseph's, accepted as an expert in Pediatric Hospital Administration; Kenneth J. Solomon, M.D., Board-certified in Neonatology, accepted as an expert in the field of Neonatology; Mr. Rick Knapp, Financial Consultant, Richardson/Knapp and Associates, accepted as an expert in the field of Healthcare Finance; Robert Nelson, M.D., Board- certified in Neonatology, Medical Director of Tampa General Hospital's NICU, accepted as an expert in the field of Neonatology; and Mr. Mark M. Richardson, Healthcare
Consultant, Richardson/Knapp and Associates, accepted as an expert in Health Care Planning.
At final hearing, UCH presented the testimony of the following witnesses: Ms. Brigitte W. Shaw, Corporate Vice President of UCH; Ms. Margaret M. Boyer, accepted as an expert in Obstetric Nursing and Administration; Ms. Nancy Angard, accepted as an expert in Nursing and ART Nursing; Linda L. Labart, A.R.N.P., accepted as an expert in Neonatal Intensive Care Nursing and Neonatal Intensive Care Training; Mr. Thomas Davidson, Health Care Consultant, accepted as an expert in Health Care Planning and Health Care Finance; Jeffrey L. Angel, M.D., Obstetrician and Gynecologist, accepted as an expert in Perinatology and Maternal Fetal Medicine; Mr.
Jeffrey Gregg, Chief of Certificate of Need, Agency for Health Care Administration, accepted as an expert in Health Care Planning and Certificate of Need Review; Keith S. Kanarek, M.D., Neonatologist, UCH, accepted as an expert in Neonatology; Dr. Henry Hyatt, accepted as an expert in Obstetrics and Gynecology; Patricia Shiono, Ph.D., accepted as an expert in Biostatistics and Epidemiology; Roberto Sosa, M.D., accepted as an expert in Neonatology; Richard Dillon, M.D., accepted as an expert in Obstetric Medicine; S. Joseph Paniello, M.D., accepted as an expert in Obstetrics and Gynecology; Steven Greenberg, M.D., accepted as an expert in
Obstetric Medicine; and Ms. Sharon Gordon-Girvin, Healthcare Consultant, accepted as an expert in Health Care Planning.
UCH Exhibits 1 through 46 and 48 through 51 were admitted into evidence; Exhibit 47 was rejected. SJH Exhibits 1 through 7 and 9 through 11 were admitted into evidence; Exhibit 8 was not offered.
AHCA presented no witness and introduced no evidence at final hearing.
FINDINGS OF FACTS
THE PARTIES
Agency for Health Care Administration (AHCA)
AHCA is the single state agency responsible for the administration of the CON program in Florida, pursuant to Section 408.034(1), Florida Statutes. AHCA preliminarily approved the UCH CON application to establish a new 5-bed Level III NICU and denied the application of SJH.
University Community Hospital
UCH is a 431-bed acute care, non-profit hospital located in northern Tampa, Florida. The hospital is licensed to operate 374 acute care beds, 10 Level II NICU beds, 20 comprehensive rehabilitation beds, and 27 skilled nursing beds. It is the third largest hospital in the Hillsborough County region and is a major tertiary institution in West- Central Florida. UCH operates six recognized "Centers of
Excellence" including: The Women's Center, The Pepin Heart & Vascular Institute, The Pediatric Care Center, The Diabetes Treatment Center, The Center for Cancer Care, and The Orthopedic Center.
UCH provides significant acute care services including cardiology, orthopedics, general surgery, ICU, CCU, obstetrics (OB), gynecology (GYN), emergency room, and others.
In addition, UCH provides certain "tertiary" services including Level II NICU services, adult open heart surgery, angioplasty, and comprehensive rehabilitation services.
UCH operates The Women's Center which was established in 1991 to address the special needs of women and respond to the growing patient demand from North Tampa and South Pasco. The Women's Center is a freestanding facility connected to the main hospital which provides a full range of OB, GYN, and newborn services. It houses delivery rooms, surgery rooms, mother/baby beds, GYN beds, an ante-partum unit for high-risk OB patients, 10 Level II NICU beds, a well-born nursery, prenatal and postnatal educational programs, and diagnostic equipment.
The Women's Center operates the Advanced Reproductive Technology (ART) program which addresses infertility problems using state-of-the-art reproductive technologies. The UCH ART program is the largest of its kind in the Tampa Bay area, and
draws many patients throughout West-Central Florida. In fact, the number of participating women has doubled in the last two years. Babies conceived from this program often require NICU services due to the age of participating women, increased pre- term delivery, high-risk medical conditions, and the frequency of multiple births.
The facility also operates a special "high-risk" OB program designed to care for women with special prenatal needs. These women often require prior hospitalization, bed rest, extensive nursing attention, or medications, and frequently request to receive these services at UCH. As with the ART program, there is an increased chance for these high- risk mothers to give birth to babies needing NICU care.
Since 1991, UCH has operated a 10-bed Level II NICU located in the Women's Center. While it was designed and equipped according to Level III NICU standards and possesses the highest quality of medical equipment available, the unit is not authorized to provide Level III NICU services.
Approximately 1000 physicians hold hospital privileges at UCH. They include Board-certified physicians covering 35 medical specialties.
The Women's Center employs three medical directors.
Its medical staff includes 83 physicians who are specialists in OB, GYN, and/or pediatrics and six additional physicians
who are specialists in maternal and fetal medicine. It provides a full range of pediatric services in its dedicated Pediatric Care Center and has physicians who are Board- certified in all pediatric specialty areas, including pediatric surgery.
In addition to its extensive staff of doctors, the Women's Center also maintains a quality group of nurses in its Level II NICU, most of which are specially certified in neonatology and have significant experience in Level III units.
The Women's Center was originally built to handle 2,000 - 2,200 births annually. However, due to factors including its location, population growth, and performance, the facility exceeded that capacity. In late 1999, UCH began construction of a $10 Million expansion, which was recently completed. Today, the facility has the capacity to handle 3,000 - 3,500 births annually.
UCH is located in the North Tampa corridor which is experiencing a population growth. It is the northernmost hospital in Hillsborough County, and the closest tertiary hospital to Pasco County.
UCH's primary service area for OB and Level II NICU patients is North Hillsborough and South Pasco. Approximately
20% of its OB and Level II NICU patient volume are residents of Pasco County.
In 2000, UCH delivered 2,168 babies. The following year, in 2001, it increased to 2,269 births and the hospital reasonably projects its volume to reach 2,500 annual births in the near future. UCH's Level II NICU unit has been well- utilized over the past several years and has experienced a 16% volume increase per year since 1999. It has the highest growth rate of all Level II providers in District 6.
UCH has twice previously applied for a 5-bed Level III NICU and was denied each time. The Agency's CON director stated that UCH was denied because: (a) at the time, there was no numeric need to support their proposal, (b) Tampa General had not previously supported their proposal, and (c) UCH had not previously provided written quality assurances to the Agency.
St. Joseph's Hospital (SJH)
SJH is a large, acute care, not-for-profit hospital, founded in central Tampa in 1934. It is licensed to operate 883 beds, including 15 Level II and 27 Level III NICU beds.
SJH is fully accredited by the Joint Commission on Healthcare Organizations, and is a state-designated Level II Trauma Center. It is one of 15 hospitals nationwide designated to participate in National Cancer Research
Institute clinical research protocols and provides adult open heart surgery services, and operates several major clinical institutes, including the Heart Institute, Cancer Institute, and Neuroscience Institute.
SJH's licensed hospital beds are distributed among three hospital facilities located on one campus and include: St. Joseph's Women's Hospital, a 193-bed facility; St. Joseph's Hospital, a 550-bed facility; and Tampa Children's Hospital at St. Joseph's with 153 beds.
Tampa Children's Hospital operates a specialty six- bed pediatric cardiac ICU, and a 16-bed pediatric ICU, and is one of the few providers in Florida offering pediatric cardiovascular surgery. In fact, it performs approximately
400 cardiac surgeries annually, with a majority performed on neonates.
Twenty-seven of the 30 designated pediatric sub- specialties are represented on the hospital's active medical staff which is comprised of 200 physicians including 120 pediatric sub-specialists.
In addition to its comprehensive pediatric and neonatal surgery programs, Tampa Children's Hospital participates in a fetal surgery program with St. Joseph's Women's Hospital, which involves close clinical cooperation
between perinatologists specializing in high-risk obstetrics, and pediatric medical and surgical sub-specialists.
Overview of CON Statutory and Regulatory Framework
Sections 408.031-408.045, Florida Statutes, outline the establishment and expansion of certain tertiary health care services in the State of Florida and is known as the Health Facility and Services Development Act. Under the CON statutory framework, health care providers seeking to establish or expand certain health care services in the State of Florida must obtain CON approval prior to implementation of their proposal. Pursuant to Section 408.035, Florida Statutes, AHCA is required to review all applications in context with statutory and rule criteria and is the single state agency authorized to issue, revoke, or deny CON licensure.
Overview of Level III Neonatal Intensive Care as a Tertiary Health Service
Pursuant to Section 408.032(17), Florida Statutes, Level III neonatal intensive care is considered a "tertiary health service" which is defined as:
health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost- effectiveness of such service.
Because of the tertiary nature of Level III NICU services, most hospitals in Florida do not offer Level III neonatal intensive care.
Overview of Level II and Level III NICU Services
Rule 59C-1.042, Florida Administrative Code, provides the specific requirements for Level II and Level III NICU programs.
Pursuant to Section 59C-1.042(2)(g), Florida Administrative Code, Level II neonatal intensive care is restricted to neonates who weigh 1000 grams or more at birth and require at least 6 hours of nursing care per day. Ventilator services may be provided in certain circumstances.
Level III care includes the treatment of neonates who weigh less than 1000 grams at birth and require at least
12 hours of nursing care per day. Level III neonates often have complex major congenital anomalies and require continuous cardiopulmonary support.
Level II NICU providers are prohibited from providing Level III NICU services and are required to transfer all neonates of 1,000 grams or less to a Level III provider. Level III NICUs that do not provide treatment of complex major congenital anomalies are required to enter into a written agreement with another Level III provider for those services and transfer the neonate patient, if necessary.
Although all Level II and Level III NICUs treat severely ill babies, Level III care involves heightened complexity and intensity due to the volatility of the Level III neonates. Their vital signs and medical status are subject to more rapid fluctuation and they usually require longer periods of respiratory support and mechanical ventilation which can result in the scarring, leakage, rupture or deterioration of the lungs.
Existing Level III NICU Providers in District 6
Currently, there are three Level III NICU programs in District 6 including SJH which operates 27 beds, Tampa General which operates 21 beds and Brandon Regional Medical Center which operates an 8-bed Level III unit.
Pre Hearing Stipulation Agreement
Prior to hearing, the parties stipulated that certain provisions of the 12 CON statutory review criteria found in Section 408.035, Florida Statutes, were not in dispute while others remained in dispute. Specifically, the parties agreed to the following:
The need for the health care facilities and health services being proposed in relation to the applicable district health plan is IN DISPUTE;
The availability, quality of care, accessibility, and extent of utilization of existing health care services in the service district of the applicant is IN DISPUTE;
The ability of the applicant to provide quality of care and the applicant's record of providing quality of care is IN DISPUTE. (However, both applicants' record of providing quality of care was stipulated as not in dispute);
The need in the service district of the applicant for special health care services that are not reasonable and economically accessible in adjoining areas is IN DISPUTE;
The needs of research and educational facilities, including, but not limited to, facilities with institutional training programs and community training programs for health care practitioners and for doctors of osteopathic medicine and medicine at the student, internship, and residency training levels is NOT IN DISPUTE;
The availability of resources, including health personnel, management personnel, and funds for capital and operation expenditures, for project accomplishment and operation is NOT IN DISPUTE;
The extent to which the proposed services will enhance access to health care for residents of the service district is IN DISPUTE;
The immediate and long-term financial feasibility of the proposal is IN DISPUTE. (However, only as to whether the applicants could achieve their respective projections of utilization).
The extent to which the proposal will foster competition that promotes quality and cost effectiveness is IN DISPUTE.
The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction is NOT IN DISPUTE.
The applicant's past and proposed service to Medicaid patients and the medically indigent is IN DISPUTE.
The applicant's designation as a Gold Seal program nursing facility pursuant to s. 400.235, when the applicant is requesting additional nursing home beds at that facility is not applicable and NOT IN DISPUTE.
As to AHCA Rule 59C-1.042, Florida Administrative Code, the parties agreed that only the following criteria remain in dispute:
(3)(h) Whether the proposal is consistent with the applicable district health plan as required in Section 408.035(1), Florida Statutes;
(3)(k) The extent to which the applicant intends to serve the Medicaid and indigent population as found in Section 408.035(11),
Florida Statutes; and
(5) Whether the applicant has met the Minimum Unit Size requirement set out in Rule 59c-1.042(5), F.A.C., which states that an applicant "shall propose a Level III NICU of at-least 15 beds and should have 15 or more Level II NICU beds.."
The NICU Proposals UCH Proposal
UCH proposes to convert 5 of its acute care beds to
5 Level III NICU beds. The 5 Level III beds will be integrated into its 10-bed Level II NICU thereby creating a 15-bed combined NICU.
UCH, in its proposal, agrees to provide the full range of Level III NICU services with the exception of pediatric cardiac catheterization and pediatric open heart surgery which require separate licensure.
UCH intends to provide 24-hour, 7 days/week physician coverage of its Level III NICU. In certain circumstances, the hospital proposes to follow the practice followed at All Children's Hospital, Brandon Hospital, and Mease Hospital in Dunedin and have neonatologists "on call" and not physically present at UCH. AHCA supports their plan.
As a condition for AHCA's approval, UCH agrees to commit at least 29.09% of its total Level III NICU patient days to Medicaid babies and at least 1% to indigent babies.
In addition, UCH agrees to follow specific procedures to ensure high quality and consents to routine inspections by the Agency.
There is significant medical/professional support for UCH's proposal. Several OB physicians in the Tampa area provided testimony favoring the proposal. They indicate that the UCH plan will improve the District's quality of health care and benefit mothers, babies, and families.
Moreover, Tampa General Hospital, a local competitor, supports the project. In fact, Dr. Robert Nelson, the medical director of Tampa General, testified that despite the fact that most UCH newborns requiring Level III NICU care are transferred to his hospital, those babies would be better served by UCH.
In addition, East Pasco Medical Center (EPMC), a large provider of extensive OB services within District 6 located directly to the geographic north of UCH, favors the plan. Given the fact that there is no Level III NICU provider in Pasco county, UCH is the closest major hospital to EPMC and would provide tremendous benefit to Pasco county's rapidly- growing patient population.
Dr. Jeffery Angel, who serves as the medical director for perinatology at SJH, Brandon Hospital, and UCH, and heads the major perinatology group in Hillsborough County also supports the UCH proposal. He provided expert testimony and opined that Level III NICU services at UCH would greatly benefit neonate patients due to the obvious risks associated with their transport.
Through implementation of its proposal, UCH purports to improve and promote continuity of care, patient and physician choice, patient access, quality of care, patient satisfaction, and competition.
SJH NICU Proposal
SJH also proposes to add 5 Level III NICU beds by converting 5 acute care beds. SJH, however, currently operates 27 of the 53 Level III NICU beds within District 6. While its existing Level III NICU unit provides excellent care, it has historically experienced peaks and valleys in
utilization over the course of days or weeks within any given month, and it's occupancy rate has consistently been under 80%.
Section 408.035(1), Florida Statutes, and Rule 59C- 1.042(3)(h), Florida Administrative Code. There is a need for the Level III health care facility and health service being proposed in relation to the District 6 Local Health Plan.
Pursuant to Section 408.035(1), Florida Statutes, AHCA performed a bed need methodology for Level III NICU services and, notwithstanding SJH's occupancy rate, determined that District 6 required 5 additional Level III NICU beds in the January 2004 planning horizon. AHCA's projection of fixed need creates a rebuttable presumption of need that no party challenged. There is insufficient evidence to modify the fixed need determination.
The evidence did, however, demonstrate that AHCA, using the Rule formula, rarely computes a numeric need for additional Level III NICU beds, and when need is determined, 1-3 beds are usually required. In fact, in District 6, the Agency has calculated a numeric need on one occasion in the past 12 years when it determined that 1 additional bed was necessary.
Interestingly however, Rule 59C-1.042(5), Florida Administrative Code, states that hospital applicants "shall
propose a Level III NICU of at-least 15 beds," which under the existing need formula, is mathematically impossible to generate within District 6 today or in the foreseeable future.
As a result, under a strict and dispositive interpretation of that rule, all new applicants would automatically be locked out of the Level III NICU market.
Recognizing that new Level III NICU programs could rarely, if ever, be established in Florida under that strict interpretation, AHCA has long interpreted the minimum size rule to be only one of the many review criteria which are weighed in evaluating the overall merits of a NICU proposal.
Section 408.035(1), Florida Statutes, and Subparagraph 59C-1.042(3)(h), Florida Administrative Code, further require the Agency to consider the applicant's CON proposal for Level III NICU beds in relation to the applicable district health plan. The District 6 Local Health Plan includes two "preferences" for evaluating proposals for Level
III. The first factor gives preference to Applicants who commit to provide the most Level III care to Medicaid and indigent patients. While Tampa General is the largest provider, UCH, in its proposal, agreed to commit 29.09% of the total Level III days to Medicaid patients and 1% to the indigent. SJH agreed to commit 25% of its aggregate patient days to Medicaid and/or indigent care.
The second preference requires Applicants to analyze the need for more Level III beds and address the impact on existing providers. UCH comprehensively assessed both need and adverse impact, and demonstrated that its approval would not adversely affect the existing providers.
Given the unchallenged published need and the District 6 Health Plan, and considering UCH's experience operating a quality, expanding OB program with an existing Level II unit in an overall growing OB market, the new bed need presents a unique and timely opportunity for UCH to enter the Level III NICU market. The UCH proposal will satisfy the Level III bed need in a manner that is consistent with the District Health Plan.
Section 408.035(2), Florida Statutes. A UCH Level III unit will improve the availability, quality of care, accessibility and extent of utilization of existing health care facilities and health services in District 6.
Pursuant to Section 408.035(2), Florida Statutes, the Agency properly considered the availability, quality, accessibility, and extent of utilization of Level III NICU providers in District 6. The evidence demonstrates that the UCH plan increases availability, ensures quality and continuity of care, promotes access, provides patient and physician choice, supports competition, and provides a better
distribution of Level III services in District 6. The SJH plan, given the facility's existing number of Level III NICU beds and occupancy rate, would not improve availability, quality, access, or utilization, and would stifle competition.
Availability and Accessibility of Quality Care
AHCA is responsible for ensuring that each district maintains sufficient providers of quality care. While the parties agree that UCH provides excellent care to its Level II patients, SJH argues that there are sufficient providers of quality Level III care within District 6. Given the variables of the district, it is questionable whether SJH, Tampa General and Brandon Hospital provide quality care that is sufficiently accessible to all residents of the district.
The experts agree that the field of OB medicine is largely unpredictable. As Dr. Angel explained, most high-risk and/or pre-term deliveries cannot be predicted; therefore, it is extremely difficult to determine, prior to birth, whether a baby will require NICU services. In fact, Dr. Dillon suggested that OB doctors correctly identify less than half of the women who will develop pre-term labor, pre-term delivery, or obstetric complications. And Dr. Greenberg admitted that only 15% of pre-term deliveries are accurately predicted.
Complicating matters at certain hospitals, including UCH, some women fail to receive prenatal care, and simply
appear for delivery. These high-risk, "walk-ins" are often drug-users and prostitutes that present significant risks of complications and problems to their babies. Frequently, they deliver pre-term infants who need the services of a NICU.
The experts agree that it is generally preferable for high-risk mothers to give birth at a hospital with a Level III NICU. Given the indigent and Medicaid patient load as well as the increasing deliveries and significant Level II NICU utilization at UCH, it is determined that UCH presents a need for Level III beds in District 6.
While transporting fragile neonates remains an option, there are many problems associated with newborn and maternal transports to other facilities. Some women are too medically unstable to be transported. Dr. Angel explained that although some transfers are reasonably safe, complications arise in neonatal and maternal transport and removing the risk improves the Level III care.
SJH admits that separating mothers from their babies who are commonly suffering from a broad array of concurrent medical problems is not preferred. The ability to treat all medical issues in one setting by a coordinated network of medical professionals provides sick babies with an enhanced probability of survival and development. It allows a qualified hospital to successfully treat many babies which
otherwise would be required to be removed from their mothers and transferred to another facility or another city.
Under the UCH plan, the facility will be capable of treating all critically ill newborns. Doctors who serve at UCH will be able to maintain the continuity of care to the mother and newborn which is important in hospitals with large OB volume and an established Level II unit.
In addition, patients in north Hillsborough and south Pasco counties will have access to a closer provider without the fear of transfer, separation anxiety or unnecessary risk. As previously indicated, UCH is a major provider of OB services in the northern section of Hillsborough county where the population is rapidly growing. And although UCH is less than a 2 hour drive from all other Level III providers in District 6, the closest Level III provider north of UCH is located in Gainesville. Given the county's expanding population base in the north and the level of traffic in the downtown Tampa area, the UCH proposal improves and promotes availability, accessibility and quality of care.
Utilization
The issue of utilization provides additional support for UCH to add Level III services. The NICU Rule calls for a facility to have at least 1500 annual births prior to
developing a Level III unit and UCH delivers over 2,200 babies each year. In fact UCH currently has a higher birth volume than many Florida hospitals with Level III units.
The Level III NICU utilization rate at SJH does not warrant 5 additional beds. Since 1998, SJH has operated below 80% occupancy for each year except 2000. In 2001, according to its internal data, SJH recorded 7,698 Level III patient days which equates to 78% occupancy with approximately 6 unused Level III beds per day. In the first quarter of 2002, SJH's occupancy rate fell to 76.5%.
In addition, the birth volume at SJH appears to be decreasing. For example, its birth volume in the first quarter of 2002 was 4% less than its birth volume in the first quarter of 2001. If, in the future, SJH's birth volume rises and it increases its Level III occupancy to 90%, pursuant to 59C-1.042(3)(g), Florida Administrative Code, SJH can automatically demonstrate a need for additional Level III beds without showing any numeric need in District 6.
Section 408.035(3), Florida Statutes. UCH can provide high quality care.
While SJH argues that UCH lacks the depth of medical experience and resources necessary to operate a Level III NICU program, the evidence suggests otherwise.
It is generally agreed that the components of high quality Level III care are quality physicians, quality nurses, and quality unit design and equipment. UCH possesses these components. UCH is a relatively new facility that utilizes the most recent medical equipment available. The hospital maintains a cadre of highly-trained, Board-certified doctors and nurses with extensive experience in Level III units. It currently provides quality care to its OB and Level II NICU patients and as Drs. Kanarek, Sosa, Angel, Hyatt, and Greenberg agreed, it is certainly capable of providing high quality Level III care.
In addition, UCH has a proven track record of developing new services and expanding existing services in a high quality manner and possesses an experienced management team. Moreover, Dr. Kanerek, a Board-certified neonatologist who initiated Tampa General's Level III unit and managed it for several years, will continue to serve as the UCH NICU director.
SJH further argues that UCH is less capable of providing quality care since mortality rates are better in high volume Level III facilities. The evidence suggests otherwise. Dr. Shiono, an expert in biostatistics and epidemiology testified there is no statistical correlation between NICU volume and patient outcome. In fact, she
recently published a professional article entitled "Hospital and Patient Characteristics Associated with Variation in 28- day Mortality Rates for Low Birth Weight Infants," after comparing mortality rates of low birth weight infants with hospital characteristics. Her study concluded that there is no relationship between a hospital's volume of Level III babies and their mortality rates.
The evidence in this case suggests the same. SJH has no better mortality rate for its Level III babies than the three 5-bed Level III units in Florida. In fact, between July 1997 and June 2001, their average mortality rates were as follows: St. Joseph's - 9.4%; West Boca Medical Center - 7.7%; Mease Hospital Dunedin - 3.0%; and North Shore Medical Center - 9.8%.
Section 408.035(4), Florida Statutes. There is a need for special health care services in District 6 that are not reasonably and economically accessible in adjoining areas.
The Agency is required to evaluate the need for Level III services in District 6 that are not reasonably accessible in adjoining areas. Undoubtedly, the UCH proposal will promote needed and improved accessibility to Level III NICU services for the residents of Pasco County.
As discussed earlier, Pasco County is experiencing growth in population and there is no Level II or Level III
NICU provider. UCH currently provides significant OB and Level II NICU care to the residents of Pasco since it is the closest major hospital to residents of East Pasco County.
East Pasco Medical Center strongly supports the UCH proposal and Pasco patients will benefit from the plan.
Section 408.035(5), Florida Statutes. The parties stipulated that the need for research and educational facilities is not at issue in this matter.
Section 408.035(6), Florida Statutes. The parties stipulated that the availability of resources, including health personnel, management personnel and funds for capital and operating expenditures is not at issue in this matter.
Section 408.035(7), Florida Statutes. The extent to which the proposed services will enhance access to health care for residents of District 6 has been discussed above.
Section 408.035(8), Florida Statutes. The immediate and long-term financial feasibility of the UCH proposal is sound.
While the parties agree that the immediate financial feasibility of the proposals is not in dispute, each party challenges the long-term feasibility and utilization projections of the other.
As previously discussed, SJH has experienced consistent unused capacity. Smaller Level III providers,
however, appear to maintain occupancy rates at 90% or greater.
Over the past 5 years, Level III units with fewer than 15 beds have averaged 94.54% occupancy while larger units report 81.24%. In 2001, smaller units averaged 98.18%, while larger
units averaged 81.97%. In District 6, between 1996-2000, Brandon Hospital, a 5-bed Level III provider, reported that its occupancy exceeded 94% each year and led the district average of all Level III providers. The long-term feasibility of the UCH proposal is sound.
For further discussion, please see the discussion above regarding the issue of utilization.
Section 408.035(9), Florida Statutes. The UCH proposal will enhance, foster and increase Level III NICU competition and improve quality and cost-effectiveness.
SJH is the dominant Level III provider in District
It currently operates 27 of the 53 Level III NICU beds in the district, however as previously described, SJH has plenty of unused Level III bed capacity. Its existing 27 beds can accommodate substantially more patient days than are currently being used. Adding 5 Level III beds to an already under- utilized provider will stifle competition.
Moreover, the SJH proposal calls for higher Level III charges than UCH. In 2004, SJH proposes an average gross charge per patient day of $2,994, while UCH suggests $2,493.
SJH's projected reimbursement rates from insurance and managed-care companies is higher as well. While the Medicaid program pays hospitals a flat fee for Level III care per day, regardless of gross charges, insurance and managed care companies negotiate reimbursement rates. In 2004, UCH proposes to be paid an average of $1,513 per day from insured patients while SJH proposes $2,898 per day. UCH proposes an average of $1,277 per day from managed care patients while SJH proposes $1,421 per day.
In addition to its proposed net charges, SJH proposes a questionable increase in net revenues per day. In 2001, SJH received an average of $917 per day. In 2004 however, SJH proposes to increase its collection to
$1,137/day, or 7.4 % per year. Since Medicaid reimbursement increases approximately 2%-3% per year, SJH must significantly increase its reimbursement from insurance and managed care companies to achieve their proposed net revenues.
The evidence demonstrates that the SJH proposal does not promote competition or cost-effectiveness. Their proposed increases suggest that SJH operates as the dominant Level III provider in a non-competitive environment and may, unilaterally, be able to control pricing. The UCH plan, on the other hand, creates an environment and potential for price competition.
Section 408.035(10), Florida Statutes. The costs and methods of the proposed construction are not at issue in this matter.
Section 408.035(11), Florida Statutes. Both UCH and SJH have a long history of providing health care services to Medicaid and indigent patients and propose to continue their commitment.
SJH and UCH treat all patients regardless of ability to pay, including OB patients and newborns. As a CON condition, UCH commits to provide a minimum of 29.09% of total Level III days to Medicaid patients and at-least 1% to indigents. SJH currently commits 25% of its Level III NICU volume to Medicaid and indigent patients combined and agrees to continue.
Section 408.035(12), Florida Statutes. The applicants' designation as a Gold Seal program nursing facility pursuant to Section 400.235, is not at issue in this matter.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of these proceedings. Sections 120.57(1) and 408.039(5), Florida Statutes.
Decision-making relating to CON applications involves balancing all of the relevant and disputed CON review criteria set forth in statute and rule. See Dept. of HRS v. Johnson & Johnson Home Health Care, 447 So. 2d 361 (Fla. 1st DCA 1984). The appropriate weight to be given to each criterion varies on a case-by-case basis depending upon the facts of each case. See Collier Medical Center, Inc. v. Dept. of HRS, 462 So. 2d 83 (Fla. 1st DCA 1985).
In the case at hand, the Agency determined that 5 additional Level III NICU beds are necessary in District 6. Under Florida law, AHCA's fixed need determination creates a legal presumption of need. See Humana, Inc. v. Dept. of HRS,
476 So. 2d 258 (Fla. 1st DCA 1985). Since no reliable evidence was introduced to the contrary, the remaining issue is which applicant can better meet the posted need.
During the review process, the Agency critically weighed and balanced all of the CON review criteria established in statute and rule and concluded that the determinations discussed in the Findings of Facts significantly weigh in favor of approving the UCH proposal. Specifically, the evidence demonstrates that UCH has a large and successful Level II NICU and OB program. The facility and proposal enjoy widespread community and physician support.
The plan will improve access and enhance the quality of care
in the district. And the new Level III NICU will promote cost efficiencies and competition.
Although UCH does not comply with the Agency's NICU Rule which calls for a Level III NICU minimum unit size of 15 beds, their proposal is not automatically rejected or defeated. Under Florida law, one-review criterion cannot supersede or completely outweigh all others. See Balsam v. Dept. of HRS, 486 So. 2d 1341 (Fla. 1st DCA 1986).
While the 15-bed minimum unit size is preferred, in the case at hand, there are several factors that collectively outweigh that single-review criterion. Among these included the fact that, like the UCH proposal, nearly half of the Level III NICU programs in Florida are below the minimum unit size.
In addition, it is clear that UCH will and the smaller Level III units do generate higher occupancy rates, improve access, provide quality health care and promote competition.
As CON Applicants, UCH and SJH each carries the burden of proving, by a preponderance of the evidence, that its respective CON application, on balance, satisfies the disputed criteria and is superior to the other. It is determined that UCH has met its burden. SJH has not met its burden.
Based on the above Findings of Fact and Conclusions of Law, it is determined that: (a) UCH satisfies the CON
review criteria at issue, (b) UCH is the better applicant to meet the need for 5 Level III NICU beds in District 6, and (c) SJH does not satisfy these criteria.
Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that:
UCH CON Application No. 9492 is recommended for approval, and SJH's CON Application No. 9493 is recommended for denial.
DONE AND ENTERED this 14th day of January, 2003, in Tallahassee, Leon County, Florida.
___________________________________ WILLIAM R. PFEIFFER
Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675 SUNCOM 278-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 14th day of January, 2003.
COPIES FURNISHED:
James C. Hauser, Esquire Metz, Hauser & Husband, P.A. Post Office Box 10909
Tallahassee, Florida 32302-2902
Michael P. Sasso, Esquire
Agency for Health Care Administration
525 Mirror Lake Drive, North Suite 310-G
St. Petersburg, Florida 33701
Robert A. Weiss, Esquire Parker, Hudson, Rainer
& Dobbs, LLP
118 North Gadsden Street
The Perkins House, Suite 200 Tallahassee, Florida 32301
Lealand McCharen, Agency Clerk
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308
Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive
Fort Knox Building, Suite 3431 Tallahassee, Florida 32308
Rhonda M. Medows, M.D., Secretary Agency for Health Care Administration 2727 Mahan Drive
Fort Knox Building, Suite 3116 Tallahassee, Florida 32308
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within
15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.
| Issue Date | Document | Summary |
|---|---|---|
| Mar. 19, 2003 | Agency Final Order | |
| Jan. 14, 2003 | Recommended Order | VCH demonstrated by a preponderance of the evidence that it was the appropriate facility to receive 5 Level III NICU beds in District 6. |
