Judges: DELPHENE C. STRICKLAND
Agency: Agency for Health Care Administration
Latest Update: Feb. 21, 1978
Summary: Petitioner did not meet its burden of proof in proving that Respondent wrongfully denied the Certificate of Need.
77-2221.PDFSTATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
TARPON SPRINGS GENERAL HOSPITAL, )
)
Petitioner-Applicant, )
)
vs. ) CASE NO. 77-2221
) OFFICE OF COMMUNITY MEDICAL ) FACILITIES, DEPARTMENT OF HEALTH ) AND REHABILITATIVE SERVICES, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, a hearing was held in the above styled cause on January 4, 1978, beginning at 10:30 a.m. in Conference Room 217, 1326 Winewood Boulevard, Tallahassee, Florida, before Delphene C. Strickland, Hearing Officer, Division of Administrative Hearings, Department of Administration.
APPEARANCES
For Petitioner: Gayle Smith Swedmark, Esquire
Post Office Box 669 Tallahassee, Florida 32302
For Respondent: George L. Waas, Esquire
Office of General Counsel
1323 Winewood Boulevard, Suite 406
Tallahassee, Florida 32301 INTRODUCTION
At the beginning of the hearing, the parties offered four exhibits which were marked and entered into evidence as follows:
Joint Exhibit 1: Application by Tarpon Springs General
Hospital for a certificate of need; Joint Exhibit 2: Report of the Florida Gulf Health
Systems Agency, Inc,;
Joint Exhibit 3: The hospital`s response to the Health
Systems Agency staff report;
Joint Exhibit 4: Letter dated November 13, 1977, from Art
Forehand to Mr. Peter Geilich denying the Tarpon Springs application.
It was stipulated that the Respondent had complied with the standard procedures as required by federal and state law in considering the subject application.
The prime issue is whether the Petitioner's proposed capital expenditure Is consistent with the criteria required to be met as a condition precedent for securing a certificate of need.
FINDINGS OF FACT
Upon consideration of the oral and documentary evidence adduced at the hearing, the proposed recommended orders of the parties and the references thereto, the following are relevant facts:
The Tarpon Springs General Hospital is a nonprofit general, medical and surgical hospital located at 1395 South Pinellas Avenue, Tarpon Springs, Pinellas County, Florida, about two and one-half miles south of the Pasco County, Florida line. It has been in existence for some 51 years and is now operated under a five year lease program operated by the Tarpon Springs Hospital Foundation. The Foundation consists of representatives of local religious, civic and fraternal organizations in the area. It has a full two year accreditation from the Joint Commission on Accreditation of Hospitals.
The facility is licensed for 126 beds, but it operates regularly as a
111 bed hospital with an eight (8) bed ward used only in emergency situations. The original space for the remaining 7 licensed beds is used primarily for office space and medical records. The eight (8) bed ward is generally used only during the months of January, February and March and on an emergency basis. The hospital treats a high percentage (about 70 percent) of geriatric patients and
80 percent of the revenue is from medicare. During the past year, most of the patient (approximately 58 percent) came from Pasco County.
The hospital has 55 or 56 physicians, two general surgeons and five specialists who have staff privileges. Approximately 28 physicians admit to Tarpon Springs General Hospital. It has bilingual employees and at least two doctors with staff privileges who speak Greek, required by some of the numerous residents of Greek decent who live in the area.
On or about August 5, 1977, Petitioner-Applicant applied for a certificate of need proposing a 40 bed expansion program for the Tarpon Springs General Hospital with renovations and/or expansion of laboratory, dietary, medical records, radiology, general storage, recovery room, business office, emergency room, and operation rooms. A total expenditure of six million six hundred thousand dollars ($6,600,000) for construction and equipment is projected. In addition there would be 600 thousand dollars ($600,000) fur possible refinancing and 300 thousand dollars ($300,000) for a required sinking fund. Funding would be a 7.5 million dollar bond issue.
The proposed service area would not be changed from servicing an area from Palm Harbor to the south, Hillsborough County line to the east, and New Port Richey city limits to the north. This area accounts for some 85 percent of current admissions to the hospital.
The hospital refers all obstetrical, most neurosurgical, most psychiatry, and complicated trauma cases to other institutions in the area. The proposed program of Tarpon Springs General Hospital is pointed toward general medical/surgical and anticipates referrals from the area hospital once the acute state of patient hospitalization is over but still in need of hospital care.
The Petitioner justified the application for the 40 beds and ancillary services by contending that the progressive patient care program is uniquely
adaptable to the area with its aged, multiple health care problems and family involvement situation. It contends that with the implementation of the progressive patient care and outpatient care concept it would be the only such general/surgical hospital available to Pinellas and Pasco counties; be more accessible; and lead to a cost-efficient delivery of health care services. It expects that costs will increase for services and additional facilities but no increase to patients is expected until 1981-82.
Petitioner projects the need of 108 full time employees, approximately a third of whom will be professionally trained personnel. Applicant indicates there would be no difficulty to recruit the needed personnel although this is questioned by Respondent. No evidence was submitted except that there was a
$66,602 expenditure for contract nursing services in Applicant's Medicare cost report which is an expenditure normally made when professional nurses are not available for full time employment.
The estimated construction-to-operation of the project would be in the Spring or Summer of 1980. Witnesses testified that it would be fair to say that three years from date of granting of the certificate of need is more realistic.
The certificate of need was denied upon review by the Florida Gulf Health Systems Agency, Inc., and the Office of Community Medical Facilities. A letter of denial was sent to Mr. Peter N. Geilich, Administrator of Tarpon Springs Central Hospital. The reasons for denial were stated in Joint Exhibit 4, as follows:
Inconsistency with the 1977 Florida State Plan for Construction of Hospitals and Related Medical Facilities. This Plan pro- jects an acute care hospital bed need in Pinellas County by 1982 or 3, 485 beds. As of 1 July 1977, per the Department of Health and Rehabilitative Services Annual Licensure List, there were 4,451 licensed acute care
hospital beds in Pinellas County. This indi- cates that Pinellas County in already
over-bedded by 966 beds against the projected needs by 1982.
There are already three existing hospi- tals (Tarpon Springs General, Community Hos- pital of New Port Richey, and West Pasco) providing service to those persons residing in your proposed service area. Records reflect that these hospitals are available and accessible to the residents of your proposed service area and these hospitals have not yet been utilized at their capacity.
Petitioner contends:
Both the Pinellas County Project Review Committee and the Pasco Advisory Committee voted in favor of the proposed expansion of the hospital.
That the unfavorable decision of the Department of Health and Rehabilitative Services was apparently based on the fact that Tarpon Springs General Hospital is located in Pinellas County.
That Tarpon Springs General Hospital is within two and one-half miles of the Pasco County line and its service area includes, in main part, Pasco County.
The hospitals that are in close proximity to Tarpon Springs General Hospital do not adequately serve the area for the following reasons:
The peculiar ethnic makeup of the community with a language barrier and close family involvement needs the long established hospital.
The character of the surrounding hospitals, one is a proprietary or for-profit hospital and one has indigents as its primary obligation.
As to the criteria of Florida Administrative Code, 10-5.11:
That Florida Gulf Health Systems Agency, Inc. has not formulated a plan, but the application of Petitioner is consistent with the State Medical Facilities Plan which considers Pinellas County over-bedded but projects that Pasco County is under-bedded.
That Tarpon Springs General Hospital has a record of planning and development although no formal plan has been adopted.
That until Florida Gulf Health Systems, Inc., adopts its health systems plans and annual implementation plan, the plan available should be used.
That because of the growth of the area and the area's peculiar need for primary hospital care for the elderly people served, the need is justified.
That if a nursing home were in the area that Tarpon Springs General Hospital would not only refer to the home but it would receive from the home and the bed load would not be reduced.
That Tarpon Springs General Hospital is "cost conscious", has at present a low daily rate and uses volunteers and shares services with other hospitals.
That the community supports the project and the plans are to finance with revenue bonds.
That no service expansion is planned and the relationship to the hospitals within the service area that include hospitals in Pasco County will be maintained.
That the beds are needed because of the local traffic conditions which have an impact on transfers. The age of patients and ethnic flavor make an increase in beds desirable.
That manpower would be no problem.
That special needs for medical and health professions is not applicable.
That Tarpon Springs General Hospital does not contemplate health maintenance organizations.
That Tarpon Springs General Hospital does not contemplate becoming a participant in biomedical or behavioral research.
The cost of Tarpon Springs General Hospital is currently one of the lowest in cost in West Central Florida and that the applicant does not include more operating rooms than it now has. That during fiscal year 977 the hospital operated at 80 percent occupancy based on 111 acceptable beds.
The Respondent contends:
That the Tarpon Springs General Hospital is in Pinellas County, Florida, which has 23 hospitals and there are approximately 1,100 hospital beds In excess in Pinellas County. That although the State Plan states that Pasco is potentially under bedded 54 beds and that approximately 58 percent of Applicant's patients come from Pasco County, a survey performed shortly before the hearings in October, 1977, showed that there were at least 240 accessible beds available to the patients that week in Applicant's service area.
That Tarpon Springs General Hospital is licensed for 126 beds and that it considers only 111 "acceptable" and uses an eight bed ward only in an emergency. Respondent contends that Petitioner could and should put the 15 beds in operation.
That in 1975 occupancy based on licensed capacity was 61 percent, in 1976, 65 percent and in the first eight months of 1977, which includes three months of heavy demand was 73 percent. That the occupancy figures Petitioner states "is based on 111 beds it feels are acceptable."
That the plans of Petitioner include replacing its four operating rooms which is a costly project and that the few surgeons that would use it do not justify the cost.
That there are three other hospitals within a ten to twenty minute drive from the center of the area of population.
That there are less costly, more efficient and more appropriate alternatives than the one the Applicant submitted. Respondent suggests an increase in bed capacity to the 126 licensed number which it has discussed with the Petitioner, and would cost between one and two million dollars. As another alternative, Respondent suggests development of a nursing home in the area.
That the cost to the patient would ultimately increase between $141 and $212 per patient as the long term implementation for the $6,600.000 expansion project. That although Medicare would pay a substantial portion of the cost adjustment,, the money for Medicare is a cost to the taxpayer and must be considered by Respondent.
CONCLUSIONS OF LAW
The relevant provisions of law are: Section 1122 of Public Law 92- 603; Public Law 93-641; C.F.R. Section 100.107; Section 381.493-381.497, Florida Statutes; Florida Administrative Code, Rule 10-5.11.
The subject application was reviewed by four levels of the Florida Gulf Health Systems Agency, Inc., three levels disapproved the application and one level approved it. The Florida Gulf Health Systems Agency, Inc., in its substantive review disapproved the application by 14-8 vote finding the proposal
was not in conformity with standards, criteria or plans employed by the Agency under Section 1122. It recommended that the Capital expenditure be excluded under Title V, XVIII, and XIX of the Social Security Act.
The reviewing authority's disapproval was recommended for the reason that proposed bed expansion was not necessary; the patients have accessibility to other nearby hospitals; other alternatives are more economical; the project is too-costly and will increase costs to patients; manpower requirements are not readily available; less costly alternatives are available and more practicable; the present occupancy rates of neighboring hospitals indicate available beds and travel distance within 15 minutes of the population center; the alternatives to new construction are not being fully implemented and that patients will not experience serious difficulties in obtaining inpatient care. On the positive side the reviewing authority cited the fact that the hospital has no corporate control over purchased services and the costs of proposed construction appears to be in conformance with other hospital construction costs.
In this proceeding, it was the Petitioner's burden to illustrate that the denial of its application was not supported by the evidence or was a result of arbitrary and capricious action on the part of the Respondent. A careful review of the evidence adduced at the hearing compels this Hearing Officer to conclude that the Petitioner failed in its burden of proof and that the Respondent's action was not erroneous.
It appears to this Hearing Officer as it did to those reviewing the application that in reviewing patient admissions from Pinellas and Pasco counties, there is no need for additional beds in Pinellas County, said county having a total excess of over 1,100 beds in projected needs for 1982. That the projected need for 1982 In Pasco County has a total deficit of 54 beds. The service area includes the privately owned New Port Richey Hospital with 290 beds and the West Pasco County Hospital with 102 beds. These are both accessible to patients from the service area so that the bed deficiency in Pasco County would not realistically be the complete burden of Tarpon Springs General Hospital in 1982. Further, some of those would logically require specialized care not available at Tarpon Springs General Hospital.
In 1976, the last full year reported, the occupancy for Tarpon Springs General Hospital was 75 percent base on 126 licensed beds and although the report of 1977 was 73 percent it was for eight months only, which included the heavy occupancy of the three winter months. Regardless of the dispute by the parties as to the precentage of occupancy, it was not contended at any time that the three hospitals of the service area were filled to capacity. In fact, a study of the three areas for the eight months from January - August in 1977 shows the heaviest demand to be in February and there were at least 39 beds available at the three hospitals. In the lightest use month, some 176 beds were available. Although it is probable that the population of the area will rise by the time the applicant's proposed building program would be in operation, and hospitals should have spare rooms for emergencies, there are the alternatives as contended by the Respondent that would increase the beds and lessen the need for the primary type care characteristic of Tarpon Springs General Hospital.
It is evident that the cost factor has been kept down by the management through efficient planning and the use of various volunteer groups, but with inflationary trends and constant increase in utilities and telephone the immediate costs will inevitably increase. With the proposed expansion significant increases would be necessary not only for the third party agency but the approximately 30 percent who have no Medicare reimbursement. Estimated
additional costs of 8.5 days per stay would range from $141.78 to $212.67 dollars.
The record shows that the Petitioner's application was fairly and fully considered by the reviewing agencies, that Petitioner was afforded due process of law in the review procedure end that Respondent timely complied with the review requirements. It is concluded that Petitioner has not met the burden of proof which is to demonstrate that Respondent wrongfully denied its application for a certificate of need proposing a 40 bed expansion program for the Tarpon Springs General Hospital with renovations and/or expansion of laboratory, dietary, medical records, radiology, general storage, recovery room, business office, emergency room and operation rooms.
RECOMMENDATION
Based upon the foregoing findings of fact and conclusions of law, it is recommended that Respondent's decision to deny Petitioner's capital expenditure proposal be affirmed.
DONE AND ORDERED this 21st day of February, 1978, in Tallahassee, Florida.
DELPHENE C. STRICKLAND
Hearing Officer
Division of Administrative Hearings
530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675
COPIES FURNISHED:
Gayle Smith Swedmark, Esquire Post Office Box 669 Tallahassee, Florida 32302
George L. Waas, Esquire Office of General Counsel
1323 Winewood Boulevard, Suite 406
Tallahassee, Florida 32301
Docket for Case No: 77-002221
Orders for Case No: 77-002221
| Issue Date |
Document |
Summary |
|
Feb. 21, 1978 |
Recommended Order
|
Petitioner did not meet its burden of proof in proving that Respondent wrongfully denied the Certificate of Need.
|
