STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DELRAY HOSPITAL CORPORATION, )

)

Petitioner, )

)

vs. )

) OFFICE OF COMMUNITY MEDICAL )

FACILITIES, DEPARTMENT OF HEALTH ) CASE NO. 77-344 AND REHABILITATIVE SERVICES, )

)

Respondent, )

and )

) SOUTHEAST PALM BEACH COUNTY ) HOSPITAL DISTRICT, D/B/A ) BETHESDA MEMORIAL HOSPITAL, )

)

Intervenor. )

)

)

RECOMMENDED ORDER

Pursuant to notice, an administrative hearing was heldbefore Diane D. Tremor, Hearing Officer with the Division ofAdministrative Hearings, at 10:30

1. on March 16, 1977, in Room217, 1323 Winewood Boulevard, Tallahassee, Florida. The partiesstipulated that the hearing was officially closed on the date ofreceipt of the transcript, April 13, 1977.

   
   

   APPEARANCES

   
   

   For Petitioner: Donald H. Reed, Jr., Esquire

   Deschler and Reed

   Boca Raton Federal Building

   555 South Federal Highway Boca Raton, Florida 33432

   
   

   For Respondent: Eric J. Haugdahl, Esquire

   Department of Health and Rehabilitative Services

   1323 Winewood Boulevard

   Tallahassee, Florida 32301

   
   

   For Intervenor: Fred W. Baggett, Esquire

   LaFace and Baggett, P.A. Post Office Box 1752 Tallahassee, Florida

   FINDINGS OF FACT

   
   

   Upon consideration of the oral and documentary evidenceadduced at the hearing, the following relevant facts are found:

   
   

   1. On or about September 20, 1976, petitioner submittedits application for a certificate of need to construct an acutecare general hospital in Delray Beach, Florida. Additional information was requested by respondent. On November 3, 1976, petitioner forwarded to respondent its "First Supplement to the Application for Certificate of Need." By letter dated November 16, 1976, respondent acknowledged receipt of petitioner's capital expenditure proposal effective November 8, 1976, referred the proposal to the Health Planning Council for Indian River, Martin, Okeechobee, Palm Beach and St. Lucie Counties, and informed petitioner that a decision on the proposal would be rendered by respondent not later than February 6, 1977.

      
      

   2. Petitioner is seeking a certificate of need to construct a new 300 bed hospital at an estimated cost of $10,695,000.00.The facility is to be a non-tax supported, investor-owned acute care medical/surgical hospital. Petitioner proposes to locate this hospital on chimerically zoned land on the southwest corner of Lake Ida Road and Congress Avenue in Delary Beach, Florida. The general service area is identified as Area 3, as defined in planning documents of the Health Planning Council, and comprises that portion of Palm Beach County within the boundaries of the Florida Turnpike to the West, Hypoluxo Road to the North, the Atlantic Ocean to the East and the Palm Beach/Broward County line to the South. Two other hospitals are currently in operation in this Area 3. The intervenor in this proceeding, Bethesda Memorial, a tax-supported acute care short-term hospital, is located within four miles to the northeast of petitioner's proposed hospital. The driving time between petitioner'sproposed location and Bethesda is five to eight minutes, or twenty minutes during heavy traffic. Boca Community Hospital is located approximately 9 1/2 miles from petitioner's location, with a driving time of between fifteen to thirty-five minutes. The existing two hospitals are accessible to residents within Area 3. Petitioner's location, being on an east-west artery, would be more accessible to those within the area defined by petitioner as its primary service area. This area excludes the area immediately surrounding the two existing hospitals (Exhibits A and C).

      
      

   3. Petitioner's application was reviewed and analyzed by a review committee of the Health Planning Council (HPC). Thiscommittee listed two factors supporting approval of petitioner'sapplication -- reasonable patient costs and patient charges andwider choices to physicians as to where they hospitalize theirpatients. It was noted that the by-laws of Boca Community Hospital do not allow staffing privileges to physicians practicing north of Atlantic Boulevard in Delray Beach. The five factors supporting disapproval of petitioner's application were as follows:

      
      

      1. Based on the HPC document entitled Acute Care General Hospital Bed Needs, 1980, March 1975, there will exist the appropriate number of beds to meet the needs of the 1980 population of Palm Beach County (including area 3). Thus, development of this proposed facility would result in an extensive, unnecessary, and costly excess of hospital beds in Palm Beach County (especially in area 3).

      2. In determining bed needs for Palm Beach County in 1980, the State of Florida's Medical Facilities Plan 1975 shows that the county currently has more than enough beds to meet the 1980 demand. Such need determination does not consider those hospital/hospital expansion projects which were approved by the HPC and are currently under construction or recently completed.

         
         

      3. Although development and subsequent population centers are anticipated in the area, the extent and completion dates for such developments are unknown. Regardless of such growth, however, the geographical proximity between Bethesda Memorial Hospital and the proposed facility would indicate that both these hospitals would be serving approximately the same population. This would result in costly competition between the two hospitals ultimately resulting in increased patient charges with no foreseeable benefits to the patient in terms of appropriateness, effectiveness, or availability of health care.

         
         

      4. Westerly population growth will necessitate the development of medical services and facilities; however, because this growth is expected to develop over a period of years and is dependent on economic factors, medical services must keep pace with population

         increases. In meeting the health needs of this population in the most effective and efficient manner, the HPC, in its document entitled Acute Care General Hospitals Long Range Growth, Position Statement and Recommendations, August 1975, states that: "Satellite facilities, both outpatient and inpatient, should be developed by the existing hospital system to provide necessary and appropriate health care in areas where the population does not justify a full service acute care general hospital."

         These centers and facilities will compliment the existing full service hospitals and not duplicate them. The proposed hospital will not provide such services and, at the same time, will foster duplication.

         
         

      5. If the proposed facility is unable to effectively implement its staff recruitment plan, costly salary competition and related recruitment factors will result among area hospitals, especially between Bethesda Memorial Hospital and the proposed new facility.

   4. By a vote of 13 to 7, the Board of Directors of the HPC recommended disapproval of petitioner's certificate of needrequest. The Board's decision was based on the reasons set forthin paragraphs 1, 2 and 3 quoted above. (Exhibit 2).

      
      

   5. By letter dated January 21, 1977, respondent'sadministrator, Mr. Art Forehand, notified petitioner that itscapital expenditure proposal was not favorably considered becauseit was not consistent with the standards, criteria or plans developed pursuant to the Public Health Service Act. (Exhibit 1).

      Specifically, it was noted that

      
      

      "The 1976 Florida State Plan for Construction of Hospitals and Related Medical Facilities, which is the current HEW approved plan, indicates a need for 191 additional hospital beds to be constructed in Palm Beach County by 1981. Subsequent to publication of this plan, a 94-bed addition to Boca Raton Community hospital and a 135-bed addition to the Palm Beach Gardens Hospital were placed under construction, and the 162-bed Community Hospital of the Palm Beaches was placed in operation. Considering these 391-bed additions against the 191 beds to be added by 1981 results in a projected overbedding of Palm Beach County by 200 beds by 1981."

      
      

   6. At the hearing, petitioner attempted to illustrate that the 1976 Florida State Plan was erroneous, and that a correctapplication of the Hill- Burton formula and the State Plan wouldresult in a showing of greater bed needs for the area in question. Based upon interpretation by the undersigned of the applicable federal and state rules and regulations, objections to this line of testimony were sustained. Thereafter, the petitioner rested and neither the respondent nor the Intervenor presented any witnesses.

      
      

   7. The 1976 Florida State Plan for Construction of Hospitals and Related Medical Facilities indicates a need for 191 additional hospital beds in Palm Beach County by the year 1981 (Exhibit 3). The Regional Health Administrator of the Department of Health Education and Welfare notified respondent by letter dated November 3, 1976, that said Plan had been approved (Exhibit 3).

      
      

      CONCLUSIONS OF LAW

      
      

   8. The evidence adduced at the hearing illustrates that petitioner gave timely notice of its intention to make a capital expenditure and that respondent timely complied with the procedural requirements of state and federal law.

      While some evidence was offered by petitioner to show that respondent and/or the local health systems agency afforded some priority to an application submitted by the intervenor Bethesda Memorial Hospital, such evidence is deemed immaterial to the issues in the instant case. The intervenor's application for a certificate of need was for the update and expansion of certain ancillary services at Bethesda. Thus, even if that application were processed at a greater speed than the petitioner's application, there is no evidence that petitioner was prejudiced thereby. In any event, the respondent timely acted within ninety days from the submission of petitioner's completed application.

   9. The remaining issue is whether petitioner's proposal is consistent with existing plans, standards and criteria developed pursuant to the Public Health Service Act. When applying for acertificate of need to construct new health care facilities, theapplicant has the burden of demonstrating the need for such health care facilities in the community and that its proposed capital expenditures is justified. Here, the petitioner has attempted to illustrate a need for more hospital beds in the area by showing that the area is growing, that one of the nearby hospital's staffing privileges are limited and that its proposed location would be more accessible to those within its proposed primary service area than the two other hospital locations. Petitioner presented no evidence as to the unavailability or over-utilization of beds in the existing facilities. Nor did it attempt to dispute the finding of the review committee that effective bed utilization levels had seldom been reached by the hospitals in the southern portion of Palm Beach County. There was no evidence that petitioner's proposed facility wouldoffer services different in kind than those offered by the nearest existing facilities.

      
      

   10. The 1976 Florida State Plan for Construction of Hospitalsand Related Medical Facilities indicates a need for 191 additionalhospital beds to be constructed in Palm Beach County by 1981. Respondent found that two existing hospitals had added 229 beds and that the 162-bed Community Hospital of the Palm Beaches had beenplaced in operation subsequent to the publication of the Plan. According to the 1976 Florida State Plan, these 391 bed additions result in a projected over-bedding in Palm Beach County by 200 beds by 1981. These facts concerning the addition of beds and the figures set forth by respondent were not disputed by petitioner. Instead, petitioner attempted to show that the figures used in the formula in the Plan were erroneous, and that if different figures were used, a greater bed need would result. As noted in the findings of fact, the undersigned would not receive evidence the purpose of whichwas to attack the correctness adequacy of the State Plan.

       
       

   11. Among the factors against which capital expenditureproposals are to be judged by respondent is "the needs . . . asoutlined by the current Florida State Plan for Construction ofHospitals and Related Medical Facilities . . ."

       F.A.C. Rule 10I-1.03. As stated in Rule l0I-1.03A(7) (b),

       
       

       "The primary purpose of the fair hearing is for the hearing officer to determine whether the proposed expenditure is con sistent with the standards, plans, and criteria established in these rules. The correctness, adequacy or appropriateness of the criteria against which the proposed

       expenditure was measured are NOT matters for consideration at the hearing . . ."

       
       

   12. This criteria for review is also set forth in the federal guidelines and procedures for states in administering s1122 of the Social Security Act. Also see F.S. s381.494(6) (c) which requires respondent to consider the "relationship between the applications and the state health plan." Thus in seeking review of the respondent's decision, which decision was based upon the Florida State Plan referred to in the respondent's Rules as a criterion for determining need and approved by the Department of HEW, an applicant will not be permitted to attack the correctness of said Plan.

       
       

   13. It is concluded that petitioner has failed to illustrate that its proposed capital expenditure is consistent with the standards, plans and

criteria developed pursuant to the Public Health Service Act. The evidence adduced at the hearing demonstrates that there is not a presently existing need for an additional 300-bed hospital in Palm Beach County and that the applicant's proposal will not foster principles of cost containment.

RECOMMENDATION

Based upon the findings of fact and conclusions of lawrecited above, it is recommended that the determination of theOffice of Community Medical Facilities to deny petitioner's application for a certificate of need to construct a 300- bed hospital in Delray Beach be upheld and affirmed.

Respectfully submitted and entered this 27th day of May, 1977, in Tallahassee, Florida.

DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

Donald H. Reed, Jr., Esquire Deschler and Reed

Boca Raton Federal Building

555 South Federal Highway Boca Raton, Florida 33432

Eric J. Haugdahl, Esquire Department of HRS

1323 Winewood Boulevard

Tallahassee, Florida 32301

Fred W. Baggett, Esquire LaFace and Baggett, P.A. Post Office Box 1752 Tallahassee, Florida 32304

Mr. Art Forehand, Administrator

Office of Community Medical Facilities 1323 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 77-000344CON

Orders for Case No: 77-000344CON