STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
HOSPITAL CORPORATION OF AMERICA, ) MARTIN MEMORIAL HOSPITAL, and ) ST. LUCIE HOSPITAL CORPORATION, )
)
Petitioners, )
)
vs. ) CASE NO. 80-1687
) 80-1715
DEPARTMENT OF HEALTH AND ) 80-1731
REHABILITATIVE SERVICES, )
)
Respondent. )
)
RECOMMENDED ORDER
This matter came on for hearing in Port St. Lucie, Florida, before the Division of Administrative Hearings, by its duly designated Hearing Officer, Robert T. Benton, II, on January 14, 1981. The transcript of the final hearing was filed on March 31, 1981. The parties were represented by counsel:
APPEARANCES
For Petitioner: Jon C. Moyle, Esquire and Hospital Thomas A. Sheehan, III, Esquire Corporation of Post Office Box 3388
America West Palm Beach, Florida 33402
For Petitioner: John Werner, Esquire
Martin Memorial 1164 East Oakland Park Boulevard, Suite 110 Hospital Fort Lauderdale, Florida 33334
For Petitioner: Felix A. Johnston, Jr., Esquire
St. Lucie 1030 East Lafayette Street, Suite 112 Hospital Tallahassee, Florida 32301
Corporation
For Respondent: Claire D. Dryfuss, Esquire
1323 Winewood Boulevard
Tallahassee, Florida 32301
After the Department of Health and Rehabilitative Services (HRS) denied its application for a certificate of need to construct a medical complex in the Port St. Lucie vicinity, to consist of a 50-bed inpatient facility, an ambulatory center, and a physicians' office building, Martin Memorial Hospital (Martin) requested a fair hearing under HRS rules, Chapter 10-5, Florida Administrative Code, and Chapter 120, Florida Statutes (1979). HRS transmitted the request to the Division of Administrative Hearings and requested assignment of a hearing officer. The matter was docketed as Case No. 80-1687.
After HRS denied its application for a certificate of need to construct a 75-bed acute care hospital in Port St. Lucie, petitioner Hospital Corporation of America (HCA) filed a petition for formal proceedings. HRS transmitted the petition to the Division of Administrative Hearings and requested assignment of a hearing officer. The matter was docketed as Case No. 80-1715.
After HRS denied its application for a certificate of need to construct a 125-bed osteopathic teaching hospital, in the Port St. Lucie area, St. Lucie Hospital Corporation (StLHC) and Brookwood Health Services with which StLHC had contracted, requested a hearing pursuant to the Administrative Procedure Act.
HRS forwarded the request to the Division of Administrative Hearings and requested assignment of a hearing officer. The matter was docketed as Case No. 80-1731.
On motion of HCA, all three cases were consolidated. See Bio-Medical Applications of Ocala, Inc. v. Office of Community Medical Facilities, Department of Health and Rehabilitative Services, 374 So.2d 88 (Fla. 1st DCA 1979); Bio-Medical Applications of Clearwater, Inc. v. Department of Health and Rehabilitative Services, 370 So.2d 19 (Fla. 2d DCA 1979).
ISSUE
Each of the petitioners disputes respondent's contention that Port St.
Lucie and vicinity do not need hospital beds beyond the number that might practicably be added to Martin's Stuart facility and HCA's Lawnwood Medical Center in Ft. Pierce. The petitioners agree that a need for hospital beds in or near Port St. Lucie exists and each petitioner takes the position that it can best meet the need. As to which of the petitioners might best meet a need it does not concede to exist, respondent takes no position.
FINDINGS OF FACT
The parties stipulated that a "population explosion" is taking place in Port St. Lucie and environs. The town was developed by General Development Corporation; 75,000 residential lots were offered for sale and 90 percent have been sold. At the time of the hearing, Port St. Lucie's population was approximately 14,000 to 16,000 persons, even though only some seven or eight thousand residential lots had been built on. In addition, approximately 10,000 persons reside in developments contiguous to Port St. Lucie. The population of Port St. Lucie may increase several fold in the next ten or fifteen years.
While the population in other parts of Martin and St. Lucie Counties is also expected to grow, the greatest increase in population in the area is anticipated in Port St. Lucie and its immediate vicinity. Already Port St. Lucie's population is greater than the population was in Stuart when a hospital was first built in that community and than the population was in Ft. Pierce when a hospital was originally built in that community.
ACCESSIBILITY
Port St. Lucie lies in south St. Lucie County more or less equidistant from Ft. Pierce to the north and Stuart, county seat of Martin County, to the south. Most residents of Port St. Lucie live ten miles or more from a hospital. The nearest hospitals are in Ft. Pierce and Stuart, which each have a single hospital.
PATIENTS AND VISITORS
St. Lucie County Fire Districts provide emergency services to residents of Port St. Lucie and vicinity. Time that emergency personnel and vehicles spend transporting patients to hospitals is time they are unavailable to respond to other emergency calls. Under favorable traffic conditions, it takes 20 to 30 minutes to drive from Port St. Lucie to either of the hospitals nearby.
Road building in St. Lucie County is not expected to keep pace with increasing population in the near term; traffic is likely to become more congested in the next few months and years. (Testimony of Commissioner Enns.) There is no public transportation in the area.
A railroad track crosses the highways connecting Port St. Lucie and Ft. Pierce's Lawnwood Medical Center. In a typical 24-hour period, trains using this track block U.S. Highway 1 for six minutes. Traveling from Port St. Lucie to Martin's hospital in Stuart, a somewhat shorter distance, requires crossing more than one railroad track as well as a drawbridge which, earlier this year, was stuck open stopping automobile traffic for an hour and a half. In the summer of 1979, a patient on route from Port St. Lucie to Stuart died in an ambulance stopped at a railroad track.
PHYSICIANS
In 1972, Bernard Daniel Ross, an internist, was the only physician in Port St. Lucie. At the time of the hearing, approximately 30 doctors had offices in Port St. Lucie, some of whom also had offices in Ft. Pierce. Dr. Ross makes up to three round trips daily between his office and Lawnwood Medical Center, which are ten miles apart. Dr. Asuncion Luyoa, a general practitioner who has lived in Port St. Lucie for three years, seas ten to fifteen new patients a day. She also makes frequent trips to the hospital. Dr. John B. Sullivan, who has staff privileges at Lawnwood Medical Center and who has practiced in St. Lucie County for 16 years, opened an office in Port St. Lucie a little more than two years ago.
UTILIZATION OF EXISTING HOSPITALS
St. Lucie, Martin, Indian River, Okeechobee, and Palm Beach Counties comprise Florida Health Service Area Region VII, the jurisdiction of Health Planning Council, Inc., (HPC), the local health systems agency. For the most part, residents of each county use hospital facilities in their own county. Lawnwood Medical Center served 12.3 percent of Okeechobee County residents needing hospitalization, 1.9 percent of Indian River County residents needing hospitalization, and 1.3 percent of Martin County residents needing hospitalization. The bulk of its patients came from St. Lucie County; of St. Lucie County residents needing hospitalization, 71 percent were hospitalized at Lawnwood. Ninety percent of Martin County residents needing hospitalization and
15.8 percent of St. Lucie County residents needing hospitalization were hospitalized at Martin's Stuart facility. Most of the remaining St. Lucie County residents needing hospitalization, 10.8 percent, went to Indian River Memorial Hospital in Vero Beach.
At the time of the hearing, more than 90 percent of the 225 hospital beds at Lawnwood Medical Center were occupied. Twenty-four authorized beds at Lawnwood Medical Center were in fact unavailable until the latter part of 1979 when 18 were opened; the final six beds (in the intensive care unit) were opened in late December of 1980. Even so, the occupancy rate at Lawnwood Medical
Center, as a percentage of 225 beds, was 70.5 for 1979. The overall occupancy rate for 1980, as a percentage of 225 beds, was 79.9. In 1980, monthly occupancy rates, as a percentage of 225 beds, were 80.2 for January, 79.7 for February, 81.1 for March, 81.8 for April, 75.7 for May, 72.7 for June, 78.6 for
July, 81.1 for August, 80.9 for September, 87.3 for October, 76.9 for November,
and 82.3 for December. Except for 20 obstetric, 15 pediatric, and 18 intensive or coronary care unit beds, all of the beds at Lawnwood Medical Center are medical or surgical. The overall 1980 occupancy rate for medical and surgical beds was 83 percent. At the time of the hearing, eight obstetric beds, four pediatric beds, four beds in the intensive care unit, and four medical/surgical beds were unoccupied at Lawnwood Medical Center. Not all medical/surgical beds can always be occupied; men and women patients are segregated and patients with respiratory diseases, among others, require isolation. On one day in January of this year, admission of 13 patients had to be delayed. These patients were put on a waiting list for elective surgery, which, in some instances, was postponed three or four weeks.
Martin's Stuart hospital has expanded five times in recent years (1960, 1963, 1970, 1976, and 1978-1979) and a sixth expansion to add 50 beds is now in progress. On January 15, 1979, when the last expansion was completed, 50 beds were opened to the public. They were filled within 24 hours. When the expansion now under way is accomplished, the Stuart hospital will have 302 beds. Martin "defines emergency bed status as. . .five or less medical/surgical beds available. . .mean[ing] that the hospital medical/surgical beds are at least
97.5 percent occupied." Martin's application, p. 30. During the period of January, 1979, through March, 1979, Martin's hospital in Stuart was on "emergency bed status" 16.7 percent of the time. During the same period in 1980, the hospital was on "emergency bed status" 45 percent of the time. A waiting list of up to 60 patients is not uncommon in the winter season.
Indian River Memorial Hospital in Vero Beach, 25 miles north of Lawnwood Medical Center, had 99 percent of its 216 available beds occupied in mid-January of this year. According to John Hoyt, executive director of Indian River Memorial Hospital, an occupancy rate as high as 90 percent suggests that pediatric and obstetric beds were pressed into service for medical and/or surgical patients. For the year ending September 30, 1980, the overall occupancy rate averaged 83 percent. The monthly occupancy rates for the calendar year 1980 were 89.9 for January, 90.1 for February, 90.8 for March,
83.9 for April, 78.8 for May, 79.3 for June, 77.1 for July, 79.0 for August,
86.0 for September, 88.0 for October, 84 for November, and 82.0 for December. Indian River Memorial Hospital plans to open another 24 beds in March of 1981, but does not anticipate having the ability to provide service for people in Port St. Lucie and vicinity. Only a few patients from southern St. Lucie County have been admitted to Indian River Memorial Hospital, which is more than 30 miles and some 45 minutes away. In the opinion of Mr. Hoyt, any patients Indian River Memorial Hospital might lose to an expanded Lawnwood Medical Center or to a new facility in Port St. Lucie would be more than offset by patients from the growing population in Vero Beach and vicinity.
HEALTH SYSTEMS PLAN
The HPC has adopted an amended health systems plan 1980-1984, which includes the following goals and objectives:
Health Systems Goal
The number of acute care hospital beds should be no more than four (4) licensed beds per 1,000 population in HSA Region #7.
Application of this goal throughout the area should take into consideration the following factors:
Changes in patient origin patterns;
Age differences within a hospital primary service area;
Emergency Scheduling;
Geographic isolations (95 percent of population not within 30 minutes of services), economic efficiency and quality assurance.
Long-Range Objectives
For the next four (4) years, any net increases in licensed acute care general hospital beds should be limited to the expansion of medical/surgical beds.
In order to meet the projected need for medical/surgical beds, a reallocation of existing beds from pediatric, obstetrical, ICU, CCU, monitored and intermediate care will have to take place.
For the next four (4) years, existing hospitals should be encouraged to expand in order to meet the projected demand for services in their primary service area either through expansion of the main facility or satellite outpatient facilities.
Health Systems Goal
Region-wide (HSA #7), the overall average annual occupancy rate for acute care general hospital licensed beds should equal 75 percent.
Long-Range Objectives
By 1984, the region-wide annual occupancy rate for licensed acute care hospital beds should increase to 75 percent.
By 1984, the region-wide annual occupancy rate for each of the following bed categories should be as follows:
Medical/Surgical 75 percent
Obstetrical 65 percent
Pediatric 65 percent ICU, CCU, Monitored
& Intermediate Care 80 percent
By 1984, any hospital with less than 50 percent annual occupancy rate should be consolidated with other hospitals in the same service area as defined by the Health Planning Council.
By 1982, all hospitals should have developed a five-year plan that contains the following:
Statement of Purpose;
Description of Present Facilities and Programs;
Statement of Goals;
Proposed Major Programs and Resources Necessary to Reach Goal.
Health Systems Goal
Average daily service charge for all acute care hospitals in HSA Region #7 should not increase at a rate greater than 1 1/2 times the annual cost-of-living increase.
Long-Range Objectives
By 1981, information should be made available to the community on gross patient revenues and total cost of hospital services within HRS #7 for the purpose of monitoring the goal.
By 1982, at least six (6) presently existing acute care hospitals in HSA Region #7 should establish cooperative arrangements for the provision of specialized services.
BED NEED PROJECTIONS
According to the preliminary 1980 census figures, St. Lucie County had a population of 86,969 and Martin County had a population of 62,979. Joint Exhibit No. 1. The Bureau of Economic and Business Research of the University of Florida projects populations for St. Lucie County of 89,500 for 1981; 92,300 for 1982; 95,700 for 1983; 99,100 for 1984; and 102,500 for 1985. Joint Exhibit No. 1 (medium projections). The Bureau of Economic and Business Research of the University of Florida projects populations for Martin County of 62,100 for 1981; 64,600 for 1982; 67,600 for 1983; 70,600 for 1984; and 73,600 for 1985. Joint Exhibit No. 1 (medium projections). The Martin County projections presumably require revision upward in light of the 1980 census results.
Preliminary 1980 census figures put the population of Okeechobee County at 20,324, and the population of Indian River County at 57,217. Joint Exhibit No. 1. The Bureau of Economic and Business Research projects 1984 populations of 23,700 for Okeechobee County and 67,300 for Indian River County. Joint Exhibit No. 1 (medium projections). The 1980 population of Palm Beach County is on the order of 594,900 and is projected to rise to 684,400 by 1984. Joint Exhibit No. 1 (medium projections).
As of December 31, 1980, Palm Beach County had 2,654 licensed and approved acute care hospital beds; Okeechobee County had 75; and Indian River County had 343. HCA's Exhibit No. 1. The 302 beds authorized for Martin's hospital in Stuart were the only acute care hospital beds licensed or approved in Martin County as of the time of the hearing. All 225 beds approved for St. Lucie County were open at Ft. Pierce's Lawnwood Medical Center, at the time of the hearing. The ratio of hospital beds to population is lower in Region VII than in any other health service area in Florida.
Although the amended health systems plan 1980-1984 specifies four hospital beds per 1,000 population, the HPC sometimes applies a rule of thumb designed to reflect the additional need for hospital beds in an area which has a larger component of elderly persons than the national average and which has seasonal swings in population. Under this rule of thumb, 1,055 patient days in hospitals are assumed for each 1,000 persons annually, along with the 75 percent average utilization rate for hospital beds. But applying this rule of thumb actually results in lower bed need projections than using the four beds per 1,000 population criterion which is used throughout the nation for populations without unusually high numbers of older persons and which do not fluctuate seasonally. As compared to four per 1,000, 1,055/365 X 100/75 yields 3.85+ beds per 1,000 population.
Using the four bed per 1,000 approach, based on the medium population projections forecast by the University of Florida's Bureau of Economic and Business Research, Indian River County will require 269 hospital beds by 1984; Okeechobee County will require 95 hospital beds by 1984; Palm Beach County will require 2,738 beds by 1984; Martin County will require 282 beds by 1984; and St. Lucie County will require 396 beds by 1984. HCA Exhibit No. 1. Using the same four bed per 1,000 population formula, a region-wide deficit of 181 beds is forecast for 1984. HCA Exhibit No. 1.
On the average, elderly people require more hospitalization than younger people require. The population of south St. Lucie County has a large component of elderly persons. Most of Port St. Lucie's residents are retirees. According to one estimate, 28 percent of the population of St. Lucie County residing south of Midway Road is older than 65. In Indian River, Okeechobee, Martin, and St. Lucie Counties, as a group, the proportion of persons over 65 to the whole population is higher than the national average. Approximately 29 percent of the population of Martin County is over 65. For Port St. Lucie and vicinity, hospital bed needs should be projected at four beds per 1,000 residents, at a minimum. On this basis, if no new beds are opened in Martin and St. Lucie Counties beyond those already certificated, and if the medium population projections are correct, there will be a deficit in the two-county area of 151 general acute care hospital beds by 1984, assuming residents of the area choose hospital care in the area. HCA Exhibit No. 1.
In evaluating the need for hospital beds for residents of Port St. Lucie, Martin and St. Lucie Counties are the logical primary service area,
instead of the four-county region that respondent used, which included Okeechobee and Indian River Counties, in addition to Martin and St. Lucie Counties. Less than ten percent of the residents of Martin and St. Lucie Counties requiring hospitalization leave the two-county area to be hospitalized. Palm Beach County is properly excluded and no party contends otherwise. Indian River and Okeechobee Counties should be excluded for the same reasons that Palm Beach County should be excluded. The distance from Indian River Memorial Hospital to Port St. Lucie is approximately the same as the distance from Port St. Lucie to the nearest hospital in Palm Beach County. Sebastian River Medical Center, the only other hospital in Indian River County, and Raulerson Hospital in Okeechobee County are further from Port St. Lucie than at least one and possibly two hospitals in northern Palm Beach County.
No hospital could open its doors in Port St. Lucie until well into 1982, even if approved today. On the basis of four beds per 1,000 population, assuming that the medium population projections of the University of Florida's Bureau of Economic and Business Research are accurate, and assuming that Martin's expansion of its Stuart facility is accomplished this year, St. Lucie and Martin Counties will have a hospital bed deficit of 79 in 1981; 100 in 1982; 126 in 1983; and 177 in 1985.
NEW CONSTRUCTION v. EXPANSION
Martin has no plans to expand its Stuart facility beyond the 302 beds for which it has already obtained certificates of need. The final 50-bed expansion now going on will utilize the hospital's ancillary services facilities fully, and fill up all available parking areas. Any further expansion would require building a new, seventh floor without interrupting the operation of the hospital; and would necessitate construction of a multi-story parking garage at a cost of $4,200 per space. Adding 50 beds to its Stuart hospital would, moreover, require 28,000 square feet of new floor space and renovation of 2,000 additional square feet in order to house necessary ancillary facilities, all at a total projected cost of $10,556,001. Martin's Exhibit No. 1. Martin projects the cost of a 50-bed complex it proposes for Port St. Lucie at $9,768,001. Martin's Exhibit No. 1.
The only other hospital that could be expanded to meet the needs of the burgeoning Port St. Lucie population is Lawnwood Medical Center, owned by HCA. Lawnwood Medical Center was designed and built with a view toward expansion, ultimately to more than 300 beds. HCA's employees project a need in 1984 for enough beds at Lawnwood Medical Center, over and above the 75 beds HCA proposes for Port St. Lucie, to justify an expansion of Lawnwood Medical Center in the near future. HCA personnel testified to plans to apply, within a year, for a certificate of need authorizing expansion of Lawnwood Medical Center by an unspecified number of beds.
Adding to a hospital takes more time than constructing equivalent facilities from the ground up. Each department of the hospital must continue its work, even if delays in construction result. A 75-bed expansion of Lawnwood Medical Center would take 18 to 20 months, HCA's architect estimates, as opposed to the 12 to 14 months the same architect estimated would be necessary to build a new 75-bed hospital in Port St. Lucie. In general, larger hospitals require more floor area per bed than smaller hospitals require.
Construction costs of adding 75 beds to Lawnwood Medical Center would be greater than the costs of constructing the 75-bed hospital HCA proposes for Port St. Lucie, but acquiring land for a new hospital would cost $500,000,
which, when added to construction costs, would make a 75-bed new hospital more expensive than a 75-bed addition to Lawnwood Medical Center, by some 139,219 in 1980 dollars, a per-bed differential of 1,856 in 1980 dollars. HCA's Exhibit No. 4. Because the space available for ancillary services in Lawnwood Medical Center is such that a 50-bed expansion can more readily be accommodated than an expansion half again as large (which would involve an additional floor of the hospital outside any "shelled in" area) it would cost less to add 50 beds to Lawnwood Medical Center than to construct a new 50-bed hospital.
Both Martin's Stuart facility and HCA's Lawnwood Medical Canter have costly specialized equipment which could not economically be duplicated at a new facility in Port St. Lucie. A new oncology center, for example, is planned for Lawnwood Medical Center at a cost of approximately $2,000,000. In order to use these specialized facilities, specimens and patients would have to be transported either to Stuart or to Ft. Pierce, and overnight stays would sometimes be required of patients. At least 80 percent of the patients at a new facility in Port St. Lucie would not require specialized services unavailable in Port St. Lucie, however.
OSTEOPATHY ON THE TREASURE COAST
The American Osteopathic Association has a membership of some 16,000 osteopathic physicians. Osteopaths practice in every state in the country, but
70 percent of them live in 15 states. The profession developed in Missouri, where it is now well established. Significant numbers of osteopathic physicians also live in Michigan, Ohio, Pennsylvania, and New Jersey, and, increasingly, Florida and California. At the time of the hearing, there were no osteopaths resident in St. Lucie County, and none maintained an office there. Outside of Palm Beach County, only seven osteopaths lived in HSA Region VII.
No osteopath had applied for staff privileges at Lawnwood Medical Center or its predecessor since January 1, 1967. Under the by-laws of Lawnwood Medical Center, dental surgeons, podiatrists, and osteopaths, as well as allopathic physicians, are eligible for admitting privileges, but only if the practitioner resides in St. Lucie County and has an office in St. Lucie County.
More than one osteopath has applied for admitting privileges at the hospital in Stuart, but none has been granted such privileges. Martin's Stuart facility's by-laws require two years' post-graduate education, for medical and osteopathic graduates alike, as a prerequisite to admitting privileges. Although neutral in form, this requirement is a barrier to most osteopaths, who typically complete one year of post-graduate education before entering general practice. One osteopath, a diplomate of the American Medical Association's Board of Family Practice with two years' education beyond osteopathy school was
denied admitting privileges because his character did not measure up to Martin's credentials committee's standards, or so they stated. Many of the medical graduates on staff at the hospital in Stuart had only a single year of post- graduate training, but they were grandfathered in when the two years' requirement was adopted in the late 1970s. The hospital in Stuart does employ an osteopath on its emergency room staff, but he does not have admitting privileges at the hospital.
Bruce C. Equi, an osteopathic physician, has an office in Stuart and 2,500 to 3,000 patients in the area. In 1979, he sent 300 patients to the Community Hospital of the Palm Beaches 45 miles away, where he has full staff privileges. A round trip from his office to visit a single hospital patient consumes two and a half hours. Loren Shefter, an osteopath whose office is in
Port Salerno, Martin County, traveled an average of 160 miles a day the week before the final hearing, partly because he lives 28 miles from his office, but partly because his office is 40 miles from the Community Hospital of the Palm Beaches, the only hospital at which Dr. Shefter has admitting privileges. He is responsible for the care of about 3,000 families. After practicing in Miami for
20 years, Arthur A. Lodato, another osteopath, opened an office in Palm City just west of Stuart. Dr. Lodato has seen about 900 patients in his Martin County office. If a patient is hospitalized under Dr. Lodato's care, it is in Miami, where he still practices half-time. Dr. Textor in Jupiter, Florida, has six osteopathic patients from Martin and St. Lucie Counties.
Upon admission to an osteopathic hospital, a "structural chart" is prepared for each patient. Depending on the results, certain "modalities of manipulative treatment" may be administered. Otherwise, the practice of osteopathic medicine resembles the practice of medicine by medical graduates; there are osteopathic radiologists, osteopathic pediatricians and so forth, but most osteopaths do not specialize.
The Southeastern College of Osteopathic Medicine, the 15th such college in the United States, was chartered in 1979 and is located in Miami, where the first class is to matriculate in the fall of this year. Beginning In the fall of 1981, the plan is, students will leave the campus for the "clinical phase" of their education, which will take place in an osteopathic hospital. If there is an osteopathic hospital in Port St. Lucie by that time, and if it meets the College's standards, such students, as well as interns and residents, might work under the supervision of the hospital staff as part of their training.
The opening of an osteopathic hospital would probably attract osteopathic physicians. There were 15 osteopaths in Palm Beach County when the Community Hospital of the Palm Beaches was originally planned. When it opened in 1975, there were 35, and now there are 65 osteopathic physicians in the area.
APPLICATIONS REVIEWED
HPC board members resident in counties other than Palm Beach County constitute the Indian River Area Committee, which considered all three of the applications at issue in the present proceedings. The Indian River Area Committee voted in favor of HCA's application (by a two-to-one margin), and voted disapproval of both StLHC's and Martin's applications to build a new facility in Port St. Lucie. Subsequently, the HRC recommended against HCA's application and against the StLHC application; and made no recommendation on Martin's proposal. Respondent's Office of Community Health Facilities then turned down all three applications, on grounds that there was no need for additional beds, that existing hospitals were under utilized, that a new facility would be inconsistent with the "objective of expanding existing facilities or use of primary satellite facilities," and, in the case of StLHC's application, that no lack of osteopathic facilities had been documented.
THE APPLICANTS' PROPOSALS
Martin would build a 50-bed inpatient facility, an ambulatory care center, and a physicians' office building in Port St. Lucie, at a total projected cost of $11,708,255. HCA would build a 75-bed hospital with emergency room facilities that would be the functional equivalent of Martin's proposed ambulatory care center, at a total projected cost of $ 8,357,848. A related company might build a physicians' office building nearby. StLHC would build a 125-bed hospital, with emergency room facilities that would be the functional
equivalent of Martin's proposed ambulatory care center, at a total projected cost of $11,700,000. At the hearing, StLHC indicated a willingness to scale down its proposal.
StLHC relies for financing (as a backup for unspecified primary financing) on a letter (typed on stationery without any letterhead) from an individual, one Joseph Iozia, dated September 17, 1980, addressed to Bruce Equi,
M.D. [sic], stating:
Please be informed that a mortgage loan of
$18,000,000 has [been] set aside for the building of the St. Lucie Hospital in Stuart [sic], Florida.
StLHC has given nothing as consideration for this supposed commitment to lend
$18,000,000 at an unspecified interest rate at an unspecified time for an unspecified term.
Martin has substantial assets, mainly in the form of the hospital in Stuart. It proposes to finance the satellite medical complex it plans for Port St. Lucie by issuing parity bonds; additional indebtedness would be secured by the same property that serves as collateral for an already outstanding bond issue, says Martin. But the existing indenture between Martin and its bondholders provides in part:
Section 11.02 Parity Bonds. Additional Bonds may be issued on a parity and equality of rank with any Outstanding Bonds with respect to the security afforded by this Indenture, under the following conditions, but not otherwise:
without regard to the requirement of subsection (c) of this section, not exceeding
$750,000 for the purpose of completing the Project;
without regard to the requirements of subsection (c) of this section, for the purpose of refunding any Outstanding Bonds which shall have matured or which shall mature not later than three months after the date of delivery of such additional Bonds and for the payment of which there shall be insufficient money in the Principal and Interest Fund, the
Bond Redemption Fund and the Bond Reserve Fund;
for the purpose of refunding any Outstanding Bonds or extending, improving, equipping or replacing the Hospital, including expenses of issuing such Bonds interest during any construction period and additional amounts to be deposited in the Bond Reserve Fund, if all of the following conditions shall have been met:
either (A) the average annual Net Revenues for the two Fiscal Years immediately preceding the issuance of such additional Bonds, as evidenced by the annual audit required by Section 9.04(b) hereof, must have been equal
to at least 1.20 times Maximum Annual Principal and Interest Requirements including
the requirements of the additional Bonds; or
(B) the average annual Net Revenues for the two Fiscal Years immediately preceding the issuance of such additional Bonds as evidenced
by the annual audit required by Section 9.04(b) hereof, must have been equal to at least 1.10 times the average Annual Principal and
Interest Requirements for such years; and the Net Revenues, as estimated in writing by a Hospital Consultant, for each of the two completed Fiscal Years next succeeding the date of completion, as estimated in writing by the Corporation's independent architect, of the improvements, extensions or replacements financed by the additional Bonds, will be not less than 1.25 times Maximum Annual Principal and Interest Requirements, including the requirements of the additional Bonds;
the Corporation shall not be in default hereunder and the payments required by Section
6.01 hereof to be made into the various funds therein provided must be current;
there shall be on deposit in the Bond Reserve Fund an amount equal to not less than Maximum Annual Principal and Interest Requirements, including the requirements for such additional Bonds; . . .
For purposes of Section 11.02(c) of the indenture, "Hospital" is defined in Section 1.01 of the indenture to mean "the Hospital Site and any hospital facilities now or hereafter situated on the Hospital Site, and the Hospital Equipment." HCA called as a witness bond counsel, who testified that it was legally impossible for Martin to issue parity bonds to build a new and distinct facility in Port St. Lucie, because issuance of parity bonds for such a purpose is proscribed by Section 11.02 of the indenture. It was not clear from the evidence, moreover, that Martin could finance construction of the facility it proposes, even if it could sell every bond it planned to issue.
HCA could finance construction of the 75-bed hospital it proposes for Port St. Lucie with cash from its operations; its revenues last year totaled 1.4 billion dollars. Alternatively, HCA, which is listed on the New York Stock Exchange, could borrow money from a bank, write commercial paper, or issue bonds. HCA has completed 159 projects since 1969. It spent $160,000,000 constructing hospitals in 1980. HCA has adequate financial, manpower, and management resources to build and operate a hospital at Port St. Lucie.
HCA is second only to the federal government as a purchaser of hospital supplies and equipment. Because it purchases in large volume, it enjoys certain advantages. In every year since 1973, expenses per adjusted admission to HCA hospitals have increased, but every year the increase has been less than the average increase in expenses per adjusted admission for all members of the American Hospital Association for two same years. The same is true for increases in net revenue per adjusted admission. HCA Exhibit No. 14. None of HCA's hospitals in Florida has increased its annual daily service charge at a rate greater than 1.5 times the annual cost of living increase. (T. 1019.) In 1979, gross inpatient revenue per admission to HCA's Florida hospitals was
slightly less than gross impatient revenue per admission to community hospitals in Florida in 1979. HCA Exhibit No. 14.
HCA proposes that the new hospital in Port St. Lucie share laundry, CAT scanning, radiation therapy, and other services with Lawnwood Medical Center in Ft. Pierce. The Red Cross, the St. Lucie County Welfare Association, Inc., a nursing home in the area, and others have expressed a willingness to work with the staff of a new hospital in Port St. Lucie.
All parties made posthearing submissions. Martin filed (proposed) findings of fact and conclusions of law as did HCA and respondent. StLHC addressed the issues in its brief. The parties' proposed findings of fact have been considered and, in large part, adopted in the foregoing findings of fact. To the extent proposed findings have not been adopted, they are deemed irrelevant or unsupported by the evidence adduced at hearing.
CONCLUSIONS OF LAW
Respondent has explicated Section 381.494(6)(c), Florida Statutes (1979), by adopting Rule 10-5.11, Florida Administrative Code, which provides, in pertinent part:
(1) The relationship of health or hospice services being proposed to the applicable Health Systems Plan and Annual Implementation Plan, adopted pursuant to sections 1513(b)(2) and 1513(b)(3), respectively, of the Act.
The need that the population served or to be served has for such proposed health or hospice service.
The availability of alternative, less costly, or more effective methods of providing such proposed health or hospice services.
The immediate and long-term financial feasibility of the proposal.
The relationship of the proposed health services to the existing health care system within the proposed service area.
The availability of resources (including health manpower, management, personnel, and funds for capital and operating needs) for the provision of the proposed services and the availability of alternative uses of such resources for the provision of other health services.
The relationship of the proposed health services to ancillary or support services.
(12) In the case of a construction project:
The costs and methods of the proposed construction including the costs and methods of energy provision; and
The probable impact of the construction project proposed on the costs of providing health services by the person proposing the project. Hearing Officer's
Exhibit No. 1.
The foregoing criteria bear on the issue of whether a new hospital should be built in Port St. Lucie, as well as on the comparative aspect of the case.
The evidence showed clearly and convincingly that the residents of Port St. Lucie and vicinity urgently need additional hospital beds now; and that the need is growing rapidly. Port St. Lucie has emerged as a new population center which should have its own hospital. If present trends continue, it is inevitable that a hospital will eventually be built in or near Port St. Lucie, and it will have been no economy to postpone construction. Doing it sooner rather than later might save somebody's life. Respondent's contention that the need should be met by expansion of the hospitals in Stuart and Ft. Pierce must be rejected. The evidence did not show that the hospital in Stuart would or could (because of physical restraints) ever expand beyond 302 beds. The evidence did not show that expansion of the hospital in Ft. Pierce, although contemplated, would suffice to meet the area's bed needs. While acquiring land and building a 75-bed hospital in Port St. Lucie would cost more (1,856 in 1980 dollars per bed) than expanding the hospital in Ft. Pierce by 75 beds, this extra cost should be more than offset by the savings in transportation costs, over the useful life of the building, for patients, visitors, and medical practitioners.
HCA's application conforms to all the criteria set out in Rule 10- 5.11, Florida Administrative Code, while neither Martin nor StLHC succeeded in their efforts to show that they had the resources necessary to make construction of a new hospital financially feasible. Rule 10-5.11(5), Florida Administrative Code.
The petitioners' applications were consolidated for hearing against the possibility that more than one of them would demonstrate entitlement (in the absence of a less costly or more effective alternative) to a certificate of need. In that event, the application reflecting the best proposal could have been granted, and competing applications could have been simultaneously denied, under Rule 10-5.11(4), Florida Administrative Code. As it turned out, the evidence was insufficient to show entitlement to a certificate of need either by StLHC or by Martin, even if HCA had not applied for a certificate of need to provide similar services.
In view of the evidence as to problems osteopaths have encountered in seeking admitting privileges at the hospital in Stuart, particularly as to the effect of that hospital's by-laws requiring two years' post-graduate education, and in light of the fact that provision of osteopathic services is one goal of the certificate of need law, see Section 381.494(2), Florida Statutes (1979), and 42 U.S.C. Section 300n-1, it is appropriate to condition the certificate of need so as to avoid the possibility of the discriminatory effect of a similar
by-law at the hospital proposed for Port St. Lucie. At the hearing, counsel for HCA indicated that he assumed attaching such a condition to a certificate of need would be lawful.
It is, accordingly, RECOMMENDED:
That respondent deny Martin's application for certificate of need.
That respondent deny St. Lucie Hospital Corporation's application for certificate of need.
That respondent grant HCA's application for certificate of need on condition that the by-laws of any hospital built pursuant to this certificate of need set no educational requirements for osteopaths, beyond the educational requirements necessary for licensure in Florida, as a prerequisite to conferring admitting privileges.
DONE AND ENTERED this 28th day of April, 1981, in Tallahassee, Florida.
ROBERT T. BENTON, II
Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32301
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 28th day of April, 1981.
COPIES FURNISHED:
Jon C. Moyle, Esquire and Thomas A. Sheehan, III, Esquire Post Office Box 3888
West Palm Beach, Florida 33402
John Werner, Esquire Suite 110
1164 East Oakland Park Boulevard Fort Lauderdale, Florida 33334
Felix A. Johnston, Jr., Esquire Suite 112
1030 East Lafayette Street Tallahassee, Florida 32301
Claire D. Dryfuss, Esquire 1323 Winewood Boulevard
Tallahassee, Florida 32301
================================================================= AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
HOSPITAL CORPORATION OF AMERICA, MARTIN MEMORIAL HOSPITAL, and ST. LUCIE HOSPITAL CORPORATION,
Petitioners,
vs. CASE NO. 80-1687
80-1715
DEPARTMENT OF HEALTH AND 80-1731
REHABILITATIVE SERVICES,
Respondent.
/
FINAL ORDER
The Department of Health and Rehabilitative Services having received a Recommended Order from Hearing Officer Robert T. Benton, II, dated April 28, 1981, and Exceptions to the Recommended Order having been filed by Petitioners, Hospital Corporation of America, Martin Memorial Hospital, and St. Lucie Hospital Corporation, and being otherwise well advised in the premises decides as follows:
The Exceptions to the Recommended Order submitted by Hospital Corporation of America are addressed as follows:
The first exception to the effect that the Hearing Officer erred in his finding of fact that building a 75-bed hospital in Port St. Lucie would be more expensive than expanding the hospital in Fort Pierce by 75 beds is without merit in that the Hearing Officer's finding of fact is supported by substantial, competent evidence.
The second exception concerns the imposition of a condition on the certificate of need concerning the acceptance of osteopaths on the medical staff of the hospital proposed to be constructed by Hospital Corporation of America. In that Hospital Corporation of America essentially stipulated to this condition at the administrative hearing, it is determined that Hospital Corporation of America has no standing to now object to the imposition of that condition. Further, there is implied authority in the certificate of need statute, Sections 381.493, Florida Statutes, it seq., for the imposition of conditions. However, the Department does accept the suggestion by Hospital Corporation of America that the wording of such condition be changed to clarify that the minimum education requirements necessary for licensure in Florida as an osteopath would not be sufficient for the practice of a specialty. Therefore, the Hearing Officer's language on this point is deleted and the following language substituted:
The by-laws of any hospital built pursuant to this certificate of need may not require,
as a prerequisite to conferring admitting privileges, additional educational require- ments for osteopaths beyond the educational requirement necessary for licensure in Florida. The by-laws, however, may restrict the exercise of privileges involving specialties (e.g., surgery) to those physicians that have success- fully completed residencies under programs approved by the American Osteopathic Association or the American Medical Association. However, the medical staff shall not be limited to only specialists.
The Exceptions to the Recommended Order submitted by St. Lucie Hospital Corporation are addressed as follows:
The portion of the exceptions which take exception to the finding of the Hearing Officer that St. Lucie Hospital Corporation did not succeed in its efforts to show that it has the financial resources necessary to make the construction of the new hospital feasible is without merit and it is determined that the Hearing Officer's findings on this issue are supported by substantial, competent evidence.
The second portion of the exceptions concerns the recommendation that a certificate of need be granted to Hospital Corporation of America on the condition that the by-laws of any hospital built pursuant to that certificate of need set no educational requirements for osteopaths, beyond educational requirements for licensure in Florida, as a prerequisite to conferring admitting privileges. This condition has been modified by the Department in this Order and it is determined that this is a reasonable approach to ensure the availability of osteopathic services and facilities and that this does purport with the requirements of law.
The Exceptions to the Recommended Order submitted by Martin Memorial Hospital are addressed as follows:
It is determined that the first exception is meritorious and an additional finding of fact is made that of the 30 physicians who have offices in Port St. Lucie, 12 of those physicians are on the staff at Martin Memorial Hospital.
It is determined that Petitioner's second exception concerning the bed need projections is without merit and that the Hearing Officer's finding on this point is supported by substantial, competent evidence.
The third exception to the findings of fact is determined to be meritorious and it is found that the failure by the Health Planning Council to make any recommendation constitutes approval pursuant to Florida Administrative Code Rule 10-5.10(4) and that the Health Planning Council staff made recommendations to the Council which recommended disapproval of the other two Petitioners' applications and approval of Martin Memorial's ambulatory care center and physicians' office complex.
The fourth exception concerning the testimony of the bond counsel presented by Hospital Corporation of America is determined to be without merit
and the finding of the Hearing Officer on this point is supported by substantial, competent evidence.
The first exception concerning the conclusions of law is without merit and it is determined that the Hearing Officer's ruling concerning the expansion of Martin Memorial Hospital was correct.
The second exception concerning the conclusions of law is found to be without merit and it is determined that the Hearing Officer's ruling that Hospital Corporation of America conforms to all the criteria set out in Florida Administrative Code Rule 10-5.11, while neither Martin nor St. Lucie Hospital Corporation showed that they had the resources necessary to make construction of a new hospital financially feasible was a correct ruling.
The last exception is without merit in that the Hearing Officer's ruling on this point was correct because neither Martin Memorial nor St. Lucie Hospital Corporation demonstrated that they had the resources necessary to make construction of a new hospital financially feasible.
The findings of fact and conclusions of law of the Recommended Order submitted on April 28, 1981, by Hearing Officer Robert T. Benton, II, are correct and are specifically adopted and incorporated herein as a part of this Final Order except as modified in the above paragraphs.
DONE and ORDERED this 9th day of June, 1981, in Tallahassee, Florida.
ALVIN J. TAYLOR, Secretary
Copies furnished:
Jon C. Moyle, Esquire and
Thomas A. Sheehan, III, Esquire Post Office Box 3888
West Palm Beach, Florida 33402
John Werner, Esquire Suite 110
1164 East Oakland Park Boulevard Fort Lauderdale, Florida 33334
Felix A. Johnston, Jr., Esquire Suite 112
1030 East Lafayette Street Tallahassee, Florida 32301
Claire D. Dryfuss, Esquire
Department of Health and Rehabilitative Services
1323 Winewood Boulevard Building One, Suite 406 Tallahassee, Florida 32301
Robert T. Benton, II, Hearing Officer Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32301
Mr. Gary J. Clarke
Deputy Assistant Secretary for Health Planning and Development
Department of HRS
1321 Winewood Boulevard
Tallahassee, Florida 32301
Ms. Eleanor Beamer, Director Licensure and Certification Department of HRS
Daniel Building
111 Coastline Drive, East Jacksonville, Florida 21121
Mr. Richard Warfield Executive Director
Health Planning Council, Inc. 4423 Westroads Drive
West Palm Beach, Florida 33407
| Issue Date | Proceedings |
|---|---|
| Jun. 11, 1981 | Final Order filed. |
| Apr. 29, 1981 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Jun. 09, 1981 | Agency Final Order | |
| Apr. 29, 1981 | Recommended Order | Grant Petitioner's Certificate of Need (CON) for new hospital subject to Petitioner not requiring any more education of osteopaths than Florida Statutes require. |
