STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HOSPITAL CORPORATION OF AMERICA, )

)

Petitioner, )

)

vs. ) CASE NO. 82-146

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing on March 28, 1983, in Royal Palm Beach, Florida, before the Division of Administrative Hearings and its duly appointed Hearing Officer, R. T. Carpenter. The parties were represented by:

For Petitioner: Jon C. Moyle, Esquire

Thomas A. Sheehan, III, Esquire Post Office Box 38S5

707 North Flagler Drive

West Palm Beach, Florida 33402

For Respondent: James M. Barclay, Esquire

Department of Health and Rehabilitative Services

1317 Winewood Boulevard

Building 2, Suite 256

Tallahassee, Florida 32301

This matter arose on Respondent's (HRS) denial of Petitioner's (HCA) application to construct a 117-bed hospital in Palm Beach County. However, a stipulation of the parties, filed subsequent to the final hearing, essentially eliminates the grounds fur denial which were the basis for Respondent's opposition.

This stipulation proposes the consideration of recent revisions in both bed-need methodology procedures under Rule 10-5.11(23), F.A.C., and population projection data, along with relevant portions of the District IX Health Plan. This information was being developed at the time of final hearing, but its utilization could not be agreed upon at that time.

In order to reach findings and conclusions based on data which is relevant and current, the stipulation is accepted as part of the evidentiary record in this proceeding. Petitioner's proposed findings of fact have been incorporated herein with minor modification. Respondent's proposed findings of fact are likewise incorporated to the extent they are not duplicated by Petitioner's.

FINDINGS OF FACT

1. General Background

   
   

   1. HCA proposes a 117-bed acute care hospital, providing medical/surgical and intensive care beds (Exhibit 1) The proposed primary service area of this hospital will be the general Royal Palm Beach/Wellington area, west of the Florida Turnpike in central Palm Beach County.

      
      

   2. The proposed service area is rapidly growing (Hoffaoker 378). For example, the Village of Royal Palm Beach has grown from 475 people in 1975 to between six and seven thousaid people today (Kaplan 60; Lamstein 209); similarly, Wellington has grown since 1975, when the first families moved in, to a population of approximately 10,000 today (Graf 83).

      
      

   3. The growth in the area has been accompanied by growth in the local medical community (Robiner 102-03), schools (Kaplan 70, Graf 87), fire stations, churches and temples, and retail establishments (Graf 87).

      
      

   4. At least a portion of the proposed service area; i.e. the Village of Royal Palm Beach, is basically a retirement community with an elderly population (Kaplan 71; Lamstein 218). This has implications for health planning purposes as the elderly utilize hospitals at a much higher rate than the non-elderly (Schoeman 420).

      
      

   5. The proposed service area has a substantial population at the present time: e.g., Wellington with approximately 10,000 people (Graf 83); the Village of Royal Palm Beach ("Village") with between 6,200 and 7,000 people (Kaplan 60; Lamstein 209); Loxahatchee Groves with between four and five thousand people (Kohl 198), and the "Acreage" north of the Village with approximately 2,500 (Kaplan 69-70) . It should also be noted that while Royal Palm Beach, Wellington and Loxahatchee are the-major population centers in the service area, there are additional developments in the area (Kohl 192; Lamstein 217, 233-34) , areas which contribute to the present population and future growth in the region.

      
      

   6. Substantial growth in the area is expected to continue, e.g. an increase of 12,000 for the Village in the next five years (Kaplan 66-67); five to eight thousand additional in Wellington (Graf 83-84); and a substantial increase in units in Counterpoint Estates, east of the Village (Kaplan 65). More important than the mere numbers, however, is the bass for this projected growth. The area in Palm Beach County along the coast has, to a large degree, been built-up and expansion must be to the west (Graf 86-87). There are a number of locales in the proposed primary service area for which development is probable. Examples include the Hawthorne area in the Village, zoned for 3,500 units with development commencing in the next two to three years (Kaplan 66); the Acreage area north of the Village with over 11;000 parcels sold of which less than 1,000 have been built (Kaplan 69-70) and which will be available for building by 1985 (Lamstein 213); almost 2,000 lots being deeded in Wellington that are ready to build on and, because they are owned and paid for, will be developed more rapidly than developer-owned lots were in the past (Stribling 96- 98).

2. Accessibility

   
   

   1. There was a consensus that for health planning purposes, hospitals should be within 30 minutes of a populaton (Konrad 310; Unger 479). The importance of travel time to a hospital was emphasized by Chief Combs, who stated that a significant number of patients cannot be stabilized by paramedics, so that it is important to be able to rapidly transport such patients to a hospital (252, 261).

      
      

   2. There was extensive testimony concerning the time spent in traveling from the proposed service area to existing hospitals on the coast, in many instances exceeding significantly the 30 minute standard. See, Diamond 36-39, 42-43 and Exhibits 3 and 4 (even an early morning ambulance ran at or over the

      30 minute standard); Graf 88 (40 minutes at best in an ambulance) Stribling 99 (42 minutes from arrival of ambulance to arrival at hospital); Cline 267 (30 minutes to a hospital on Saturday morning in 1981 with increased time since then). Indeed, the minimum response time reported by fire department Chief Combs was 20 minutes under a Code 3 response, i.e. using lights, sirens, horns and not necessarily observing the speed limit (237-38). Similar experiences were reported in everyday travel from homes to offices in the eastern part of the county (.e.g., Rebiner 103-04; Kohl 194).

      
      

   3. The full extent of the accessibility problem (both now and in the future) experienced by residents of the proposed service area was shown by the traffic engineer, Mr. Zook, the only traffic engineer expert presented by either side. His analysis, Exhibit 7, showed that only a single hospital was less than

      20 minutes away in 1981, two years ago, with the remaining closest hospitals to the area 24 minutes or more away. This study presented the dramatic increase in travel times that are projected to occur as the primary service area population, and indeed areas to the east of the primary service area, continue to grow. The average travel time for 1985 is over 30 minutes to the closest hospital and by 1988 every hospital is well beyond 30 minutes (Exhibit 7; Zook 152, 154). The result is that the travel time for the residents of the proposed service area to a hospital is approximately double that of the average medical trip experienced by a Palm Beach County resident (Zook 155-156). The lack of a hospital in the Royal Palm/Wellington area requires an additional 2.7 million vehicle miles of travel, at a cost of more than half a million dollars a year (Zook 156-57). It should be noted that the study was conducted during the slowest traffic period of the year (Zook 130) and that traffic congestion increases during the "season" (Combs 249). Additionally, Mr. Zook testified that the travel times would be longer if one were to actually start from a resident's home (127), a point verified by the actual experience of residents from the area (e.g., 10 to 15 minutes simply to get out of the Loxahatchee area to a major thoroughfare, Kohl 199-200).

      
      

   4. The travel times shown in Exhibit 7 are the result of the traffic congestion on the roads and the inability of the major thoroughfares serving the area, i.e. Okeechobee Boulevard and Southern Boulevard, to handle traffic (Zook 134-135, both roads over capacity; Kaplan 61 and Combs 241, traffic congestion on Okeechobee). Roadway improvements that might be made possible by the recent legislative tax increase could not be implemented for at least seven years, if started today. Even if such Improvements were in place by 1988, the average travel time would be reduced by only a minute or two for the three closest hospitals to the north and not at all for the two closest hospitals to the South (Zook 157-60). The future increased travel times projected by Mr. Zook were confirmed by local residents, who have experienced and increase in traffic congestion as the area has grown (Robiner 105, Kohl 192-93, Kline 266)

   5. The only argument concerning travel times raised by HRS was the suggestion that early morning runs should have been included in calculating an average driving time. This is contrary to accepted traffic engineering principles (Zook 145-46) and was also contrary to the methodology used by the HSA and relied on by HRS in its State Agency Action Reports (Konrad 350-51). Indeed, the average travel times calculated by Mr. Zook included twice the number of non-peak travel runs than did the HSA method.

      
      

   6. Travel problems were cited by residents in explaining their reasons why they supported the proposed hospital (e.g. Graff 90, Kline 268), as well as by members of the Western Community Coalition (Lamstein 221-22, 225) and the Palm Beach County Commission (Exhibit 12). Available beds that are not accessible to residents really are not relevant alternatives in considering the need for a new hospital (Graf 92-93; Robiner 107; Konrad 355).

      
      

3. Availability of Beds

   
   

   1. Apart from the issue of accessibility, there are also problems with the availability of beds at the existing hospitals that serve residents of the proposed service area, particularly during the season. Ms. Diamond, Assistant Administrator at Doctors Hospital, noted the problems of accommodating patients, particularly during the "season," having patients waiting in the ER room, and the inability of other hospitals to accept such patients because those hospitals are also full (45-46, 50; Exhibit 5). The unavailability of beds and the frequency with which area hospitals are on emergency bed status was confirmed by Chief Combs (249). The availability of beds in the future presents an even greater problem, in that beds would not be available to serve the proposed service area without the new hospital (Unger 503-09). Indeed, even with the new hospital, unless market shares changed, the occupancy rates at some of the hospitals closest to the service area would be so high as to not be available (Table 11, Exhibit 11; Schoeman 430).

      
      

   2. In assessing those hospitals that are available to serve the residents of the Royal Palm Beach/Wellington area, . Good Samaritan Hospital is not "available" to a portion of the populace as it does not accept Medicare patients (Diamond 50-51; Schoemen 421), thus making that hospital unavailable for those residents that rely on Medicare to pay their hospital bills. The proposed HCA hospital will accept Medicare and Medicaid (Diamond 51-52) and would thus be an available alternative for those patients.

      
      

4. Population Projections

   
   

   1. The parties have stipulated that the population figures to be used in this proceeding are the medium range projections contained in the "Projections of Florida Population by County, 1985-2020," Population Studies Bulletin #65, June 1983, Bureau of Economic and Business Research, University of Florida. (Stipulation 2). These projections show a 1988 population for Palm Beach County of 791,000 and a population for District IX of 1,124,060. These projections were higher than those utilized by the HCA witnesses in making utilization and bed need calculations (compare Stipulation, 2 with Exhibit 13) and would result in higher projections and increased bed need.

5. Bed Need

   
   

   1. Bed need calculations were presented using various methodologies for Palm Beach and the five-county HRS district by Mr. Unger with the following results:

   
   

   Palm Beach County HRS District

   Additional Beds Additional Beds Needed Needed

   1. State Health Plan 239 357

   2. Federal Guidelines 153 235

   3. West Boca Decision 349 512

   4. State Uniform Bed

      Need Methodology 169 257

      
      

      (Exhibit 14, Unger

      496-505).

      
      

      1. The Federal Guidelines, which, utilize the same 4.0 beds/1,000 population guide as the HSP, allow for adjustments based on age differences and seasonal fluctuations in population; these adjustments were not made and thus the figures presented using that methodology are a conservative estimate of bed need (Unger 498-99). The "West Boca Decision" was a Final Order of the Department in DOAH Case Nos. 81-1198 and 81-1212 (October 7, 1982). The result is that each of these methodologies showed the need for the 177 beds proposed by HCA (Unger 506-07)

         
         

      2. The bed need calculations set forth in the above paragraph were made prior to the availability of the June, 1983, BEBR projections. As noted above, the more recent figures show an increased population projection for both Palm Beach County and for District IX. Employing the agreed upon population projections to update Exhibit 14 would show the following:

   
   

   Additional Beds Needed

   
   

   Palm Beach County HRS District IX

   
   

   1. State Uniform Bed Need 206 317

      Methodology (4.02 Beds/1000)

      
      

   2. State Health Plan 278 418

      (4.11 Beds/1000)

      
      

   3. "West Boca" Decision 388 575

      (4.25 Beds/1000)

      
      

   4. Federal Guidelines 191 294

      (4.0 Beds/1000)

      
      

6. Utilization

1. Focusing on the proposed service area, the analysis performed by Dr. Schoeman demonstrated that the proposed hospital would be operating at acceptable occupancy standards by 1988 (427-29; Exhibit 11, Table 10). In fact, as his analysis did not adjust for the increasing percentage of the elderly and

   the increase in use rates for the county resulting from the new Delray and West Boca hospitals (Schoeman 419-20, 466), the use rate employed was conservative and tended to underestimate utilization. (The contrary results reached by Mr. Roud, apart from differences in population projections, were the result of incorrect retention rate assumptions and an arithmetical miscalculation, Schoeman 568-77.)

   
   

2. The five closest hospitals to the proposed service area (St. Mary's, Community, Good Samaritan, Doctors, and J.F.K. Memorial) accounted for 98.5 percent of patient days generated from residents of that area (Schoeman 400; Exhibit 11, Table 1). The impact of the HCA hospital on those five hospitals was shown to be minimal (Schoeman 429-31; Exhibit 11, Table 11). In fact, even with the new hospital in operation, several of the existing closest hospitals would be operating at unreasonably high occupancy level. unless market shares were changed (Schoeman 403).

   
   

3. The occupancy standard advocated by the State was a county-wide average of 75 percent for medical/surgical beds (Konrad 351). However, Mr. Konrad's testimony also indicated that HRS could approve additional beds even if this county-wide standard were not met if hospitals closest to a proposed hospital met this standard (Konrad 352, 356). This was, in fact, done by HRS in approving the expansion at the Delray Community Hospital (351-52). The average occupancy at the five closest hospitals in 1982 was 75.8 percent (Exhibit 11, Table 3), during a year when 50 beds at Doctor's Hospital were closed for a substantial period due too renovation (Diamond 45). In this instance, however, acceptable county-wide occupancies were shown, including the new hospital, by 1988 (Schoeman 431-33, Exhibit 11, Tables 12 and 13; Unger 509).

   
   

4. The utilization projections made by Dr. Schoeman were based on population projections that were lower than those now agreed upon by the parties. The result of using the higher population projections would be to increase the projected utilization and occupancy rates of both the proposed hospital and existing hospitals (Schoeman 428, 433-34)

   
   

   CONCLUSIONS OF LAW

   
   

5. The criteria for evaluating this application are set forth in Section 381.494(6)(c), Florida Statutes (1982), which provides in part as follows:

   
   

   (c) The department shall review applications for certificate-of-need determination for health care facilities and services, hospices, and health maintenance organizations in context

   with the following criteria:

   1. The need for the health care facilities and services and hospices being proposed in relation to the applicable district plan, an- nual implementation plan, and state health plan adopted pursuant to Title XV of the Public Health Service Act, except in emergency circumstances which pose a threat to the public health.

   2. The availability, quality of care, ef- ficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospices in the applicant's health service area.

6. By agreement of the parties and approval of the Hearing Officer at prehearing conference, only criteria 1 and 2 above were at issue in this proceeding. Thus, the evidence presented and the conclusions reached here are confined to those criteria.

   
   

7. The testimony of the parties' witnesses revealed a consensus that there was no applicable district plan nor annual implementation plan. Accordingly, the only applicable plan under criterion 1 to be used in this proceeding is the State Health Plan. Using the methodology set forth in the State Health Plan for this area, more than sufficient need in both Palm Beach County and HRS District IX was shown to justify the proposed 117-bed hospital.

   
   

8. The State Uniform Bed Need Methodology, stipulated to by the parties as the "appropriate bed need methodology" to be used in this proceeding reveals a sufficient bed need to justify the hospital proposed by Petitioner.

   
   

9. HCA also demonstrated the need for its proposed hospital through other acceptable health planning methodologies, including that employed in the Final Order of the Department in Southeastern Palm Beach County Hospital District vs. HRS, etc., DOAH case nos. 81-1198 and 81-1212 (Final Order October 7, 1982) and the Federal Health Planning Guidelines. Additionally, the local Distiict Plan, although not yet adopted as a rule, recognizes the need for a hospital in the Royal Palm Beach/Wellington area. Thus, every methodology introduced in this proceeding demonstrates the need for the project.

   
   

10. With respect to Criterion 2, HCA demonstrated that there would be serious accessibility problems for residents of the proposed service area within the five year planning horizon. Hospital beds in the five hospitals closest to the proposed service area are not always available, particularly during the season (late October through April). The impact of the proposed new hospital on the five closest hospitals which account for more than 98 percent of the patient days generated for their proposed service area) would be minimal. Even with a new hospital, remaining hospitals in Palm Beach County would be operating at the occupancy level deemed satisfactory by HRS by 1988.

RECOMMENDATION

Based on the foregoing, it is

RECOMMENDED that Respondent enter a Final Order granting Petitioner's application.

DONE and ENTERED this 30th day of August, 1983, in Tallahassee, Florida.

R. T. CARPENTER 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 30th day of August, 1983.

COPIES FURNISHED:

Jon C. Moyle, Esquire

Thomas A. Sheehan, III, Esquire Post Office Box 3888

707 North Flagler Drive

West Palm Beach, Florida 33402

James M. Barclay, Esquire Department of Health and Rehabilitative Services 1317 Winewood Boulevard

Building 2, Suite 256

Tallahassee, Florida 32301

David H. Pingree, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 82-000146

Orders for Case No: 82-000146