vs. ) CASE NO. 82-1903
Intervenor. )
Final hearing was held in the above-captioned matter, after due notice, at Tallahassee, Florida, on February 21-25, 1983, before Thomas C. Oldham, Hearing Officer.
For Petitioner: Jon C. Moyle, Thomas A.Sheehan, III, and Donna H. Stinson, Esquires
Moyle, Jones and Flanigan, P.A. 707 North Flagler Drive
For Respondent: James M. Barclay, Esquire
For Intervenor: Jean Laramore and Alfred W. Clark, Esquires Laramore and Aye, P.A.
This proceeding arose as a result of Respondent's provisional denial of Petitioner's application for a Certificate of Need to establish obstetrical service facilities at Tallahassee Community Hospital, pursuant to Chapter 381, Florida Statutes.
By Order, dated August 16, 1982, Tallahassee Memorial Regional Medical Center was granted leave to intervene in the proceeding, pursuant to Rule 28- 5.207, Florida Administrative Code.
The parties filed a Pretrial Stipulation stating their respective positions and limiting the legal issues herein to enumerated provisions of subsection 381.494(6), Florida Statutes. The stipulation was accepted by the Hearing Officer.
At the hearing, Petitioner presented the testimony of 13 witnesses, including the testimony of Dr. James Courtney by video deposition, and submitted
9 exhibits in evidence. Intervenor presented the testimony of 17 witnesses and submitted 7 exhibits in evidence. Intervenor's Exhibit 2 was rejected, but is attached for appellate purposes. Respondent presented the testimony of 5 witnesses and two exhibits.
Post-hearing submissions by the parties in the form of proposed recommended orders have been fully considered and those portions not adopted herein are considered to be either unnecessary, irrelevant, or unsupported in law or fact.
On February 1, 1982, Petitioner Tallahassee Community Hospital (TCH) filed an application for a Certificate of Need with Respondent Department of Health and Rehabilitative Services (HRS), Office of Community Medical Facilities, to establish an obstetrical service at its hospital located in Tallahassee, Florida. The application reflected that Petitioner proposed to make a capital expenditure of $2,130,000.00 to construct a new obstetrical wing to the hospital as an extension to the existing south wing of the facility. It plans to use twenty existing licensed medical/surgical beds in the south wing as postpartum beds. The new wing will include five family labor/delivery (birthing) rooms, two other delivery rooms, a recovery room, a twenty bassinet nursery, and ancillary facilities. According to the applicant, the estimated cost of construction has increased to $2,250,000.00. TCH is a private for- profit hospital that is wholly owned by Hospital Corporation of America. The hospital was established in 1979 and currently has 180 state-licensed beds. (Testimony of Fleming, Petitioner's Exhibits 1, 8; Respondent's Exhibit 1)
TCH based its application on the perceived need for some twenty to thirty additional obstetrical beds in Leon and surrounding counties by 1984 based upon the capacity of existing facilities and a projected increase in births. It had also received expressions of concern from physicians and local citizens concerning a shortage of obstetrical services in Tallahassee and a desire for alternative services. (Testimony of Fleming, Respondent's Exhibit 1)
The application was reviewed by the then existing Florida Panhandle Health Systems Agency, Inc. and by Respondent's Office of Community Medical Facilities, in accordance with criteria contained in the agency's Health System Plan, and pursuant to Section 381.494, Florida Statutes. However, 1982 statutory revisions to Chapter 381 eliminated the concept of health systems agencies and they are no longer in existence. Although the present law establishes local health councils to develop district plans based on goals and criteria concerning unique local health needs, no applicable district plan has been established. By letter of June 1, 1982, Respondent's administrator of Community Medical Facilities provisionally denied the application on the grounds that the proposed project was not consistent with the Florida Panhandle Health Systems Agency, Inc.'s Health Systems Plan in that obstetrical services are well
supplied in the service area and additional beds and services are not needed. He further stated that the project was not justified based on a sufficient number of obstetrical beds in the area for projected needs, and that continuation of obstetrical services at the existing facility is a less costly and more effective alternative to the establishment of a new unit in the community. Finally, the letter based the proposed denial on the ground that establishment of additional obstetrical services could result in a decreased level of utilization at the existing Level II service facility (TMRMC) which might adversely impact the quality of care, and that Level I obstetrical services should not be developed in urban areas where existing Level II
facilities have the capability to meet the community's obstetrical needs in that such could lead to lack of quality care in both institutions. TCH thereafter requested an administrative hearing. (Testimony of Straughn, Konrad, Respondent's Exhibit 2)
The recognized health service area of TCH is called the "capital sub- area" which includes Leon County and the seven surrounding counties of Franklin, Gadsden, Jefferson, Liberty, Madison, Taylor, and Wakulla. According to the 1981-82 state hospital licensure application file, only two hospitals in the service area have obstetrical beds. One is Intervenor Tallahassee Memorial Regional Medical Center (TMRMC), with 34 beds, and Gadsden Memorial Hospital with nine beds. Two hospitals within the sub-area are shown in the license file to have licensed bassinets only (Madison - 7 and Taylor - 8). However, testimony at the hearing showed that currently Gadsden has 10 beds, Madison has
7 beds and Taylor has 3 beds. The Gadsden, Madison and Taylor facilities, together, serve only approximately 15 to 20 percent of the sub-area population births. Approximately 80 percent of all births in the sub-area occur at TMRMC. (Testimony of Straughn, Petitioner's Exhibit 8, Respondent's Exhibit 1-2)
It is recognized in the 1981 Florida State Health Plan, and generally throughout the medical community, that hospitals providing obstetrical services fall into three types or "levels" of care. Level I is a facility that provides services primarily for uncomplicated maternity and newborn patients. Level II is a perinatal unit which should be available in large urban and suburban hospitals where the majority of deliveries occur. These units should provide a full range of maternal and neonatal services for uncomplicated patients and for the majority of complicated obstetrical problems and certain neonatal illnesses. Institutions operating such units should have the physical capacity to accommodate annually. Level III is a regional perinatal center that can provide care for all serious types of maternal, fetal and neonatal illnesses and abnormalities. Although the majority of hospitals with obstetric units are classified as Level I facilities, the quality and sophistication of care provided varies considerably depending upon the location, size and staffing of the hospital. TCH intends to establish a Level I obstetric facility.
(Testimony of Courtney, Bucciarelli, Plessala, Petitioner's Exhibits 6-7, Respondent's Exhibit 1)
Intervenor Tallahassee Memorial Regional Medical Center (TMRMC) is owned by the City of Tallahassee, but the hospital is leased and operated by Tallahassee Memorial Regional Medical Center, Inc., a non-profit corporation. TMRMC's 1981-82 renewal application for state licensure reflected 771 total beds, including 34 obstetrical beds. Although the same number of obstetrical beds had been listed on prior license applications for several years, hospital officials testified at the hearing that its 1982-83 license application reflected 54 such beds, including 20 beds that had been used in past years for overflow purposes, but had not been registered with the state because they were not ordinarily staffed. The HRS Director of Licensure and Certification has
expressed the view that hospitals are licensed to operate a specific total number of beds, but that allocation of licensed beds to various services can be determined by a hospital based on the "patient Mix." (Testimony of Mustian, Honaman, Rogers, Petitioner's Exhibit 8, Respondent's Exhibit 2)
In August 1980, TMRMC advised Joseph N. Clemons, a local architect, that it was developing a master plan for the fourth floor of the hospital, including the obstetrical unit, and requested him to conduct a study and develop ideas of how best to combine areas and consolidate clinical spaces, due to an increasing obstetrical load over the past several years. In February 1982, Clemons submitted to HRS plans for renovation of the labor and delivery facilities at TMRMC which were designed to handle a planned delivery rate of 3,000 annual births. The renovations were undertaken and completed in September, 1982. Further renovations to the nursery area were completed in December, 1982. As a result of the renovations, the obstetrical unit presently consists of four delivery rooms, eight labor rooms, one birthing room, one five- bed recovery room, and 46 post-partum beds, together with nursery and service facilities. Eight of the pre-existing 54 post-partum beds on the fourth floor were eliminated as a result of the renovations, but the hospital officials claim that these beds were merely "relocated" to the second floor and are available for use when necessary. They further state that although they have not had to inform local obstetricians of the eight additional beds, the nurses were aware of their existence. The estimated cost of the renovations has been approximately $300,000.00. An HRS architect who reviewed the renovation plans found that the 46-bed obstetrical unit should be adequate until 1985 under obstetrical planning guidelines. Long-range plans of TMRMC call for a three- year project to enlarge and move the obstetrical unit to the second floor of the hospital. (Testimony of Clemons, Meadows, Rogers, Mann, Mustian, Honaman, Petitioner's Exhibit 3, Respondent's Exhibit 2, Intervenor's Exhibit 5)
Prior to and since the TMRMC renovations, several obstetricians have found the facilities at the hospital to be overcrowded to the extent that the quality of care available to patients has been adversely affected. Under such circumstances, the nurses and physicians are "spread too thin" and it is difficult to find the necessary personnel during crises. The facilities were characterized as "bursting at the seams now," and considered inadequate to handle the present number of deliveries. Although the hospital normally has a peak demand during the months July through September, there have been a number of occasions since last September when all post-partum beds and labor beds have been full. In a number of instances, as recently as during the course of the hearing, insufficient space in labor rooms has resulted in patients laboring in the hallway with consequent lack of privacy. In one instance, there was insufficient space in the delivery room for a patient and the obstetrician was obliged to delay the delivery. In another recent case, a patient undergoing a high-risk pregnancy had to labor in the recovery room due to lack of labor room space. Recovery rooms lack the necessary equipment for patients undergoing labor and thus increase the element of risk. Semiprivate post-partum rooms at TMRMC have been found too small for two beds and present problems of access during emergencies. At times, cribs have had to be placed in the hallway unattended due to the lack of adequate space for the physician when in the room. Although the recovery room was supposedly expanded from four to five beds as a result of renovations, it is crowded with only four beds in place. (Testimony of Curry, Griner, Ashmore, Hayward, Rogers, Meadows, Petitioner's Exhibits 3-4)
The state requires that labor rooms be provided on the basis of the estimated annual birth rate. Although expert testimony indicates that the appropriate number of deliveries per year per labor room could vary from 250 to
450, and from 700 to 750 births for a delivery room, it is found that the figures of 300 and 750 respectively, together with 365 deliveries annually for a birthing room are reasonable in this regard. Therefore, the eight labor rooms at TMRMC, together with the one birthing room, could accommodate 2,765 births a year. The four delivery rooms, together with the one birthing room, would have a maximum capacity of 3,365 annual deliveries. There were 2,987 births at TMRMC during the year 1980-81 and approximately 3,200 during the year 1981-82. Thus, labor room capacity has already exceeded and delivery room facilities are close to capacity at the present time. Although there are two existing locker rooms that could be converted to labor rooms in the obstetrical unit, they are not presently being utilized for such purposes. (Meadows, Richardson, Hayward, Rond, Rogers, Honaman, Petitioner's Exhibits 3-4, Respondent's Exhibit 2)
An accepted method of further determining the additional need for health care facilities in a particular health service area is to examine the adequacy of like and existing health care services as to the number of presently available post-partum beds in the light of projected bed needs for the ensuing five-year period. Experts in the field of health planning are in general agreement that the most accurate estimate of projected obstetric bed needs is first to arrive at future numbers of births by projecting the number of females of child-bearing age, i.e., ages 15 to 44, in the service area, and the projected fertility rate of that age group. Based upon projected fertility rates of female childbearing population for the area, it is estimated that there will be 4,358 births annually in Leon County by 1988. This figure is then multiplied by the average length of stay in the hospital (which was 3.9 days per patient at TMRMC in 1980-81) to arrive at the total projected number of patient days per year, and when this figure is divided by 365 days, an average daily census figure is determined. The average daily number of beds represented by the daily census is then used to determine bed need at 75 percent occupancy, subtracted by the current number of beds in Leon County to arrive at projected 1988 needs. In view of previous findings as to the results of renovations of TMRMC's obstetrical unit, it is further found that the most realistic figure of present obstetrical beds in that unit at the present time is 46 beds rather than
54 as claimed by TMRMC. Accordingly, the estimated bed need for Leon County in 1988 is calculated as follows:
Projected Births: | 4,358 per year |
Average Length of Stay: | 3.9 days |
Projected Patient Days: | 16,996 days per year |
Average Daily Census: | 47 |
Total Bed Need at 75 |
|
Percent Occupancy: | 63 |
Current Beds in Leon County | 46 |
Additional Beds Needed in 1988: | 17 |
(Testimony of Schmeling, Richardson, Straughn, Petitioner's Exhibit 2, Respondent's Exhibits 1-2, Intervenor's Exhibit 7)
The establishment of a 17-bed obstetrical unit at TCH would represent
27 percent of the 63 beds needed in Leon County, and therefore reasonably would be expected to handle at least 1,176 of the projected 4,358 anticipated annual births by 1988. TMRMC's 46-bed unit would constitute 73 percent of the available Leon County beds and therefore the annual number of births at its hospital in 1988 would be 3,182. The latter figure is comparable to the present annual rate of births at TMRMC and is its present approximate capacity. Accordingly, the establishment of a TCH unit would not appreciably impact adversely upon the financial resources of TMRMC, nor reduce its ability to
render Level II obstetrical services because it would still be experiencing more than 3,000 births per year. Additionally, as heretofore found, TMRMC does not have adequate facilities to accommodate a greater number of patients on an annual basis than is presently the case. TMRMC presented data in an attempt to establish a loss of income that would result if the TCH unit were to be established. However, such evidence was insufficient upon which to base accurate findings. (Testimony of Richardson, Intervenor's Exhibit 7)
The obstetrical unit proposed by TCH is designed to provide a "family centered" approach to obstetrics whereby the mother and spouse, together with other family members, may participate in the birth experience to the maximum extent desired. This is a relatively new concept which involves such considerations as provision for family labor and delivery (birthing) rooms, birthing chairs, and proximity of the newborn baby to the mother and family to a much greater extent than has been the case in the past, if such procedures are medically safe and permitted by the attending physician. This approach is designed to enhance "bonding" of the family members and the child to strengthen the family unit. This concept also encourages the prospective mother and her family to participate in prenatal instruction and instruction during hospitalization concerning proper methods of care for the mother and child, and special needs of the other family members. The proposed TCH unit will provide facilities designed to emphasize the family-centered approach. In the past year, TMRMC has placed more emphasis on such a program by the establishment of the employee position of patient educator who coordinates courses for prospective parents, and by permitting such innovations as "rooming in" of the infant in the mother's room, demand feedings, and permission for husbands to attend the birth. However, its facilities are not presently ideally designed for accommodation of family members. (Testimony of Fleming, Novak, Brickler, Fortson, Sheehan, Rogers, Mustian, Intervenor's Exhibit 3)
The maternal and infant health portion of the 1981 Florida State Health Plan embodies the "regionalization" concept in obstetrical services which is designed to develop a geographically based service network which integrates resources in order to achieve appropriate, efficient utilization. The concept is recognized as a "broad aim" and involves use of the "levels of care" concept, and development of mechanisms for early identification of high-risk cases, proper referral of such cases, and transfer of patients between care levels as their risk status changes. Although consolidation of resources is considered in the concept in determining if larger obstetrical units result in economies of scale and improvements in quality of care, those considerations are minimized in situations where the area physicians can be expected to admit patients to alternate facilities. Selection of a hospital can be the decision of either the patient or physician, or both. Accordingly, in the event an obstetrical unit is established at TCH, it reasonably may be anticipated that patients will be admitted by physicians to both hospitals, dependent upon the preferences of the patient, physician, or both. An undesirable feature of the existence of two units in one city is that obstetricians are sometimes faced with the prospect of simultaneous births at different hospitals. It may then become necessary to have another physician attend one of the births. However, this problem also occurs when physicians are on vacations or otherwise absent from the geographical area. (Testimony of Plessala, Curry, Ashmore, Brickler, Winchester, Petitioner's Exhibit 7)
The State Plan has a goal for the provision of obstetric and neonatal services on a regional basis by 1985. Objectives to achieve this goal include availability of Level I facilities to 90 percent of the population within thirty minutes driving time in urban areas, agreements among hospitals in the area as
to patient transfer, an available supply of obstetrical services at all levels consistent with population needs, provision of obstetrical services at the least intensive and least costly level consistent with patient-risk status and care preferences, encouragement of institutions to establish policies allowing staff privileges for all qualified professional practitioners, design and operation of intrapartum care units at economically efficient sizes, operation of short-stay intrapartum care units at an annual occupancy of at least 75 percent area-wide, and provision for equal access to services regardless of the patient's ability to pay. TCH either meets or plans to meet all of these guidelines if a unit is established at its hospital. (Testimony of Fleming, Unger, Petitioner's Exhibit 7)
An additional goal of the State Plan is to reduce infant mortality below current levels. This includes the expansion of the Regional Perinatal Intensive Care Program (RPICP) in the state at Level III centers, and the development of "stepdown" units whereby recuperating infants at Level III hospitals may be transferred to a Level II facility for completion of treatment and observation. TMRMC is currently approved as a "stepdown" facility but cannot commence operation until it secures a qualified neonatologist. Although there is apprehension that the establishment of another obstetrical unit will impair the Hospital's ability to obtain a neonatologist, the fact that patients found to be of the high-risk category after screening at TCH undoubtedly would be transferred to the TMRMC Level II facility should reduce any such concern to a great extent. (Testimony of Bucciarelli, Unger, Courtney, Curran, Petitioner's Exhibits 6-7)
A primary concern of various segments of the local medical community to the establishment of a Level I Unit at TCH is the perceived added risk of infant mortality due to the lack of specialized care that can be given to high- risk patients at the Level II TMRMC facility. One of the major questions in this regard is the ability of the medical staff at a Level I hospital to provide sufficient advance screening of potential problems, and also the potential additional risk that would be encountered in the transport of such patients to a higher level facility. The most common problem encountered in this regard is respiratory failure in infants and the necessity of certain skill levels in managing the crisis within a short period of time. Although the staff of smaller hospitals sometimes will lack the expertise to deal with such problems as well as the more sophisticated medical centers, sufficient expertise can be obtained by frequency of experience. Additionally, the fact that the same local physicians ordinarily would be expected to practice at both hospitals would assist in alleviating this problem. TCH plans to have sufficient available equipment to provide for emergencies and will assemble a trained staff with experience in dealing with such cases. A further way to reduce inherent risk is by screening of patients during pregnancy to identify the risk factors and make timely referral to an appropriate level facility. It is estimated that adequate screening procedures can detect high-risk patients in 60 percent of the cases prior to delivery. About 7 to 10 percent of the patients are found to require more than Level I services, although with proper equipment and personnel, some of these could be treated at a Level I facility. Out of the approximately 8 percent high-risk babies, some 3 percent need complex care at a Level III facility and the remainder at a Level II facility. An interchange of information and assistance from a Level II to a Level I facility in an "outreach" program whereby staff is sent from the Level II facility to instruct in the assessment and transfer of sick babies is beneficial in reducing the element of risk. Although there is some risk in the transport of infants with respiratory disease, cooperation between the hospitals is essential. It is necessary that there be a qualified transport unit or team in accomplishing the
move from one hospital to another. An isolette, which is a one-bed intensive- care unit, must be used in the transport vehicle. TCH plans to have such staff and equipment to effect the transfer of patients as necessary. Currently, TCH has an agreement with the Level III Shands Teaching Hospital and Clinic at Gainesville for the transport of patients, as does TMRMC. It is found from the foregoing that the necessity of transporting infants from TCH to TMRMC will be within normal limits experienced within urban areas, and should present only a minimal risk of harm. Similar risks are necessarily encountered in the transport of infants from Level II to Level III facilities over a much greater geographical distance. (Testimony of Bucciarelli, Curran, Courtney, Fleming, Derrick, Unger, L. St. Petery, Petitioner's Exhibits 6-7, 9)
There is a split of opinion in the local medical community as to the desirability of establishing an obstetrical unit at TCH. The pediatricians uniformly are opposed to the new unit, primarily because they feel that the continued availability of high-quality care and adequate funding at TMRMC would be jeopardized by the reduced volume of births if a new unit were to be established. Concern has also been expressed by family practice physicians who provide newborn care in Tallahassee and believe that such care should be confined to one institution. Their concern is predicated upon potential problems concerning simultaneous coverage of two institutions and a belief that costs necessary for the construction of the TCH unit would eventually be passed on to the consuming public. On the other hand, a number of local obstetricians are dissatisfied with the physical facilities at TMRMC, and the previous perceived reluctance of its officials to take remedial action to expand facilities and address patient concerns as to family-centered type innovations until after the TCH application was filed. It is undisputed that the qualifications and dedication of the medical and nursing staff at TMRMC are excellent, but it is also clear that their efforts have been hampered in the past by inadequate facilities and, as heretofore found, will continue to be so hampered under present conditions in spite of the recent renovations. The obstetricians further point out that the recently developed innovations at TMRMC show the value of competition in improving the quality of patient care. Several practitioners fear that a separate unit at TCH will result in an excessive number of indigent patients at TMRMC. However, TCH accepts indigent patients and intends to do so in the future. A large number of sick infants are born of indigents, but those requiring Level II care would be cared for at TMRMC regardless of whether a new unit at TCH were to be established. It is found that all of the above concerns have some degree of validity and are properly taken into consideration in determining the ultimate issues in this proceeding. (Testimony of Plessala, Curry, Griner, Ashmore, Deeb, Brickler, Kohler, Winchester, Cooper, L. St. Petery, J. St. Petery, Intervenor's Exhibit 1, supplemented by Intervenor's Exhibit 4)
TCH will have sufficient qualified nursing personnel for operation of its proposed obstetrical unit. Patients will be classified according to the type of care that they desire or is required, and staffing will be based upon these needs. One nurse will be responsible for both the mother and child for "rooming in" situations whereby the baby remains in the room with the mother as long as desired. The nursery will also be staffed. There are two nurses at the hospital who are trained for intensive-care unit duties. TCH has never experienced any difficulty in the past in obtaining nursing personnel. In addition, a number of nurses presently on the TCH staff are qualified in obstetrical nursing. The staff will be trained through a regular program prior to opening the proposed unit. It is anticipated that 46 full-time registered nurses and licensed practical nurses will be required to staff the proposed unit. (Testimony of Derrick, Unger, Respondent's Exhibit 1)
19 TCH does not deny access to its services to any consumer based on age, race, sex or handicap. Although it routinely screens all patients for ability to pay, no individual in need of immediate or emergency treatment is denied access to hospital services. It also permits access to its facility to patients without adequate health care financing upon recommendation by hospital physicians. In such cases, patients are assisted by the hospital social worker to arrive at payment plans. No patient has ever been denied admission at TCH for inability to pay charges. During 1981-82, TCH experienced 7.3 percent bad debt arising from charity cases which was similar to the 8 percent experienced in that year by TMRMC. It is anticipated that bad debt will rise to a figure of
15 percent of patient revenue upon operation of the requested unit, not including adjustment for reimbursement of Medicare and Medicaid funds. (Testimony of Fleming, Petitioner's Exhibit 5, Respondent's Exhibit 1)
TMRMC conducts a family practice program for its resident physicians. Dr. Alex D. Brickler, who instructs the residents in the obstetric portion of the program, foresees a potential adverse impact on the program by a reduction of the middle-class group of patients if the unit at TCH is established. He feels that this would reduce the experience level of the resident physicians in addressing problems common to patients of various economic backgrounds. Although Dr. Brickler's apprehensions may be justified, no other evidence was presented upon which to evaluate the extent of the impact upon the training program in this regard, and therefore an accurate assessment cannot be made at this time. (Testimony of Brickler)
The cost of construction of the proposed TCH obstetrical unit will be financed through available equity funds provided by Hospital Corporation of America. Accordingly, the immediate financial feasibility of the proposed project is assured. The projected income statement of TCH for the first three years following operation of the unit shows that the unit will be operated at a profit based on achieving 1,107 births at the hospital in 1986. It is anticipated that patient costs will be competitive in the community and that the unit will achieve 75 percent occupancy by 1988. It is found that sufficient evidence has been presented to show the long-term financial feasibility of the proposed unit. (Testimony of Wittenstaeter, Fleming, Unger, Petitioner's Exhibit 5, Respondent's Exhibits 1-2)
The TCH project will use existing inpatient rooms for the new obstetrical service and thus reduce the scope of new construction with consequent saving in capital costs. The existing medical/surgical beds will require no renovation in converting to post-partum usage. The cost per patient at TCH should not increase because increased volume of overall hospital utilization will result from the offering of the new service. During calendar year 1981, TCH experienced a utilization rate of only 39.5 percent. Use of the hospital should therefore increase as a result of the added service, thus possibly lowering the present cost per patient. It is anticipated that initial additional revenue from the new service will completely offset the increase in operating costs. (Testimony of Unger, Respondent's Exhibit 1)
As heretofore found, the establishment of the TCH unit reasonably can be expected to reduce the number of births at TMRMC by at least 27 percent. Reduced revenue to that hospital as a result of fewer admissions will undoubtedly have an adverse financial impact. Although this normally would be expected to result in increased costs per patient, such an effect would be diluted by the necessity of remaining competitive with TCH. In addition, the establishment of an additional obstetrical service at TCH will allow TMRMC to
function at a higher degree of efficiency because of the reduction of volume presently experienced in its overcrowded facility. (Testimony of Unger, Fleming, Plessala, Curry, Ashmore, Respondent's Exhibit 1)
In accordance with subsection 381.494(6)(d) Florida Statutes, the following specific findings are made:
Less costly, more efficient, or more appropriate alternatives to the establishment of an obstetrical unit at TCH are not available. Although TMRMC recently filed a Letter of Intent to expand the hospital, including expansion and relocation of its obstetrical unit, such a proposal could not be considered in this proceeding as a viable alternative to the application under consideration due to its preliminary and speculative status at the time of hearing.
Existing obstetrical inpatient facilities at TMRMC are presently being used in an appropriate, but sometimes inefficient manner due to overcrowded conditions at various times.
Reasonable alternatives to the proposed new construction at TCH are unavailable except to the extent that existing patient rooms will be utilized for patients in the proposed obstetrical unit.
Patients will undoubtedly experience progressively serious problems in obtaining adequate obstetrical care at TMRMC due to overcrowded facilities, if the proposed new service is not established.
Testimony was received at the hearing from four public witnesses who expressed the view that the community would benefit from competition resulting from the establishment of the TCH unit. One couple expressed concerns about the poor attitude of TMRMC in responding to the obstetrical needs of the community and as to whether the hospital would permit husbands to be present at Cesarean section births. The other couple had twins born at TMRMC in January 1982 and were informed that it was against the policy of the hospital to permit the husband to be present during Cesarean section births. They were also upset with the infrequency in which the mother was able to have the infants with her during the first few days after birth. (Testimony of J. Doyle, P. Doyle, B. Mahdi, A. Mahdi)
CONCLUSIONS OF LAW
This proceeding arises under the Health Facilities and Health Services Planning Act contained in Chapter 381, Florida Statutes. Petitioner Tallahassee Community Hospital seeks a Certificate of Need for its proposed capital expenditure to establish a new obstetrical unit. The parties have stipulated that certain of the criteria set forth in subsection 381.494(6)(c) are applicable to the project. The parties agreed that subsections (6)(c)(1), (2), (8), (11), and subsection (6)(d) are fully applicable. It was further stipulated that those parts of subsections 6(c)(5) and (9) were applicable to the extent that they are not covered in subsections (6)(d), and that those parts of (6)(c)(7) as relate to availability of nursing personnel, effects on family practice residency program at TMRMC, and socioeconomic accessibility to OB services were applicable. It is considered that the evidence presented ruled out the need for consideration of subsections 6(c)(5) and (9). The remaining criteria are discussed below in accordance with the requirement of subsection 381.494(6)(c) that "The department shall review applications for certificate-of-
need determinations for health care facilities and services . . . in context with the following criteria:".
Subsection 381.494(6)(c)(1) "The need for the health care facilities and services . . .being proposed in relation to the applicable district plan, annual implementation plan and state health plan adopted pursuant to Title XV of the Public Health Service Act." There is no longer an "applicable district plan" or "annual implementation plan" because the former district health service agencies which prepared such plans are no longer in existence. The applicable provisions of the existing 1981 Florida State Health Plan as to maternal and infant health have been addressed in the factual findings hereof as to levels of care, regionalization of facilities, infant mortality, and specific goals and objectives set forth therein. Although the plan favors the "regionalization" approach to more efficient use of beds, it does not necessarily subscribe to the theory that consolidation of such services into one large unit in a particular locality necessarily is desirable as improving quality of care or economies regarding costs, providing that the same medical staff is available to serve the same population at two or more separate hospitals. Also, there should be provision for early identification of high-risk cases, and proper referral and transfer of such patients between care levels as their risk-status changes. The evidence shows that the establishment of the TCH unit would meet the required objectives of geographical availability, agreements as to patient transfer, provision of obstetrical services at the least intensive, least costly level consistent with client risk status and care preferences, policies permitting staff privileges for all qualified professional practitioners, and equal access to services regardless of the patient's ability to pay. The evidence further showed that the establishment of a new unit will be consistent with population needs, will be designed and operated at an economically efficient size, and should operate at an annual occupancy of at least 75 percent within the first few years. Although the transfer of patients between TCH and TMRMC involves a slightly higher risk factor than would be the case if all local patients were admitted initially to the Level II facility, the evidence supports a conclusion that such transfers are currently routinely accomplished between Level I and higher care level facilities, that early identification of high-risk cases permits early referral of such cases and thus reduces the risk, and that TCH will utilize a qualified transfer team with appropriate equipment which further should reduce the possibility of endangering the patient. Accordingly, it is concluded that the proposed unit will be substantially in accordance with the applicable provisions of the State Health Plan. The evidence further establishes that a need exists in the community for a 17-bed obstetrical unit at TCH based on the planning horizon of 1983-1988.
Subsection 381.494(6)(c)2 "The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services . . . in the applicant's health service area." Evidence presented at the hearing as to the foregoing factors was restricted to the obstetrical services rendered by TMRMC as the sole hospital in the Tallahassee-Leon County area. The facts show that services rendered by TMRMC are readily available to the area populace and that they are over-utilized to some degree. The quality of care and efficiency generally provided by the facility is excellent, but on occasion is diminished by the overcrowded conditions and inadequate facilities. Even after recent renovations of the unit, there have been instances where insufficient space has resulted in inconvenience and potential adverse effects on patients. The facilities are barely adequate normally, and inadequate during peak periods. It is thus clear that they are insufficient to appropriately provide necessary obstetrical services in the next several years.
Subsection 381.494(6)(c)7 "The availability of resources, including health manpower, . . . the effects the project will have on clinical needs of health professional training programs in the service area; . . . and the extent to which the proposed services will be accessible to all residents of the service area." As heretofore stated, the parties restricted the application of this criterion to the availability of nursing personnel, the effects on the family practice residency program at TMRMC, and the socioeconomic accessibility to OB services. TCH presented sufficient evidence as to its ability to secure sufficient qualified nursing personnel for the proposed unit. The evidence received concerning the impact of a TCH unit on the existing family residency program at TMRMC was insufficient to show any measurable adverse impact. TCH, as a matter of past practice and established policy, makes its facilities available to all patients, regardless of economic status.
Subsection 381.494(6)(c)8 "The immediate and long-term financial feasibility of the proposal." TCH submitted sufficient evidence to show that it will have adequate financial resources available to meet the immediate financial requirements for its project, and further justified future financial feasibility based on the expected number of patient admissions and income generated therefrom. It does not anticipate an unduly long lag time in achieving profitable operations by reason of expressed customer and physician demand, combined with the growing population of the area. The evidence supports this view and it is therefore concluded that the unit will operate at a satisfactory extent of utilization prior to the end of the five-year planning horizon.
Subsection 381.494 (6)(c)11 "The probable impact of the proposed project on the cost of providing health services proposed by the applicant, upon consideration of factors including, but not limited to, the effects of competition on the supply of health services being proposed and the improvements
. . . in the delivery of health services which foster competition and service to promote quality assurance and cost-effectiveness. It is unquestionable that competition among health service providers ultimately produces beneficial results to the consumer. This has already been demonstrated by the manner in which TMRMC has fairly recently sought to improve its obstetrical facilities and meet patient preferences relating to obstetrical services. The family-oriented proposal of TCH has spurred TMRMC to provide similar services. TCH has shown that capital expenditures for the proposed project will most likely be offset by revenues received not only from obstetrical services, but that the addition of a new service will assist in creating needs for other hospital services. The additional revenue and stimulation of other business in its presently under- utilized facility should combine to enhance cost-effectiveness and reasonable patient charges. On the other hand, although TMRMC undoubtedly will experience an initial loss of revenue due to the division of patients between the two hospitals, the relatively small size of the TCH unit should not impact significantly upon the much larger TMRMC, and the fact of competition should provide an impetus for TMRMC to critically examine its overall cost structure.
In the past, it has operated as the sole provider of obstetrical services in the community. However, it should now look to the positive aspects that healthy competition certainly will engender. In this regard, it should be noted that the legislative intent of the Health Facilities and Health Services Planning Act, as set forth in subsection 381.493(2), includes the following statement:
It is intended that strengthening of competitive forces in the health services industry be encouraged.
Subsection 381.494(d) The findings made with respect to the criteria set forth in this provision are in keeping with approval of the proposed TCH unit.
Subsection 381.494(8)(c) provides that after review of the application for a Certificate of Need, Respondent shall issue or deny the same in its entirety or for identifiable portions of the total project. Based on the foregoing Conclusions of Law, TCH has established its need for a 17-bed obstetrical unit and, accordingly, its application should be approved to that extent.
That the application of Tallahassee Community Hospital for a Certificate of Need to establish a 20-bed obstetrical unit be approved in part by issuance of said certificate for a 17-bed unit.
DONE and ENTERED this 27th day of April, 1983, in Tallahassee, Florida.
THOMAS C. OLDHAM
Filed with the Clerk of the Division of Administrative Hearings this 27th day of April, 1983.
Jon C. Moyle, Thomas A. Sheehan, III, and Donna
H. Stinson, Esquire
Moyle, Jones and Flanigan, P.A. 707 North Flagler Drive
James M. Barclay, Esquire Frank Olsavsky, Legal Intern Department of HRS
Alfred W. Clark, Esquires Laramore and Aye, P.A.
