Judges: K. N. AYERS
Agency: Agency for Health Care Administration
Latest Update: May 10, 1983
Summary: Petitioners didn't show additional hospital beds were needed or that the formula used to compute the need was improper/insufficient. Dismiss.
82-2757.PDFSTATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
MARION COMMUNITY HOSPITAL, )
)
Petitioner, )
)
vs. ) CASE NO. 82-2757
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent. )
) MUNROE REGIONAL MEDICAL CENTER, )
)
Petitioner, )
)
vs. ) CASE NO. 82-2844
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a consolidated public hearing in the above-styled cases on April 6, 7, and 8, 1983, at Ocala, Florida.
APPEARANCES
For Petitioner: Fred W. Baggett, Esquire and (MCH) Michael J. Cherniga, Esquire
Post Office Drawer 1838 Tallahassee, Florida 32302
For Petitioner: Thomas A. Sheehan, III, Esquire (MRMC) Post Office Box 3888
West Palm Beach, Florida 33402
and
Donna H. Stinson, Esquire Barnett Bank Building, Suite 858 Tallahassee, Florida 32301
For Respondent: James M. Barclay, Esquire
Department of Health and Rehabilitative Services
1317 Winewood Boulevard, Suite 256
Tallahassee, Florida 32301
Because both Petitioners are seeking authority to construct additional hospital beds in the same service area, these cases were consolidated so a comparative hearing could be provided. However, neither Petitioner presented evidence intended to show his application more meritorious than the application of the other. Instead, they concerted their efforts, and evidence, to show that a need existed for the additional beds sought by both applicants. Accordingly, each Petition will be treated as independent of the other in this Recommended Order.
By Petition filed 1 October 1982, Marion Community Hospital (MCH), Petitioner in Case 82-2757, contests the denial of the Department of Health and Rehabilitative Services (DHRS), Respondent, of its application for a certificate of need to construct a 54-bed oncology unit and an eight-bed surgical intensive care unit at its hospital at Ocala, Florida, a total of 62 additional medical- surgical beds.
By Petition filed 8 October 1982, Munroe Regional Medical Center (MRMC), Petitioner in Case 82-2844, contests the denial of DHRS, Respondent, of its application for a certificate of need to construct a sixth floor, to add 34 medical-surgical beds for a pulmonary medicine unit, eight general pediatric beds, four pediatric intensive care beds, and to relocate 20 pediatric beds onto the new sixth floor, for a net gain of 46 acute care hospital beds. Both of these applications were denied by DHRS in letters dated 10 September 1982 on grounds that applying the Health Service Plan (HSP) standard to the projected 1987 population, there was no demonstrated need for additional hospital-surgical beds in Marion County.
At the hearing nine witnesses were called by MCH, eight witnesses were called by MRMC, two witnesses were called by DHRS, five public witnesses testified in support of both applications, and 22 exhibits were admitted into evidence.
Proposed findings submitted by the parties and not included herein were not supported by the evidence, were not consistent with the Health Systems Plan, or were deemed immaterial to the results reached.
FINDINGS OF FACT
MCH was constructed circa 1973 as an acute care hospital and before 1980 had 126 medical-surgical beds authorized including eight intensive care beds. MCH is a for-profit hospital owned by Hospital Corporation of America. It is financially able to fund the proposed addition. In 1980 it received a certificate of need (CON) to add 64 medical-surgical beds for a total bed
capacity of 190 medical-surgical beds. These beds came on line in January 1982.
MCH here proposes to add a 54-bed unit for oncology patients; to add six operating rooms to use primarily for eye, ear, nose and throat surgical procedures on an outpatient basis; and a new eight-bed surgical intensive care unit located on the first floor adjacent to the existing surgery department. Currently, the hospital has two oncologists on staff who use a 16-bed unit dedicated to the treatment of cancer. Space exists for the additional operating room so the net result is an application for an additional 62 beds. The application also included expansion of general stores and maintenance and the addition of a parking structure, which were granted, leaving only the issue of need for the 62 additional beds requested at a cost of $7 million.
When constructed MCH had an eight-bed ICU primarily for coronary care patients located on the second floor of the hospital in the opposite wing from the surgery department on the first floor. It has added a four-bed ICU on the fourth floor by converting two semiprivate medical-surgical rooms. The ratio of ICU beds to total beds in 1973 was 8:126 which is nearly identical to the current ratio of 12:190.
The evidence was unrebutted that the ICU at MCH is usually full, that on occasion patients have to wait in the emergency room until a less ill patient can be moved from a bed in ICU, and that the more ICU beds are available the more they will be used. This use was attributed to the doctors desiring their patients to be in an ICU and to testimony that current surgical procedures are more sophisticated than formerly and a greater need exists today for a surgery patient to go to an ICU than existed 15 years ago. In its application for a CON (Exhibit 18) MCH's estimated charge for a medical-surgical bed is $100-150 per day and its estimated charge for ICU beds and SICU beds is $350 per day.
The primary service area for MCH is Marion County. Petitioner submitted evidence that nearly 20 percent of the cancer patients diagnosed in Marion County in 1981 came from the surrounding counties of Citrus, Lake, Sumter, and Levy. Accordingly, MCH contends that its primary service area for oncology patients should include these counties. Evidence was also submitted that MCH has been certified by medical associations as an approved cancer treatment hospital; that oncology service is a service generally provided in regional hospitals which provide Level III medical treatment; and, therefore, MCH should be considered on a different scale than Level II services. No evidence was presented that any health systems plan ever considered MCH as a regional cancer hospital or established any bed need for cancer patients at MCH.
The evidence was also unrebutted that cancer patients at MCH are primarily treated by chemotherapy; that the drugs used in the treatment are extremely toxic, some have a short life span after being mixed and must be used almost immediately; that having a mini-pharmacy in the cancer ward is highly desirable; that special training of nurses is required to safely administer these drugs to patients; that patients develop nausea, ulcers in the mouth and throat, and present special feeding problems, and because of these special feeding problems it is advantageous to have some facilities in the cancer ward to prepare food at odd hours for patients; that cancer is a "personal" disease, patients desire more privacy, and should have private rooms; that an area away from the patient's room where the patient can visit with his or her family and the family can consult with the doctor in some privacy is desirable; that some newer drugs require hospitalization of the patient for treatment with these drugs, but the hospital stay is shorter and the drugs may be used over longer periods of time; and that the patient needs the security that comes from developing a feeling of trust by the patient of the nurses and doctors who are administering to his needs.
MCH has no radiation treatment facilities in the hospital. However, the hospital staff has access to a Linear Accelerator which is located in a private physician's office on MCH's campus.
Several witnesses testified to the need for additional beds for cancer patients at MCH; that patients have had to wait several days for a vacant bed; some oncology patients have had to be placed in other wards at MCH; and that special treatment and special training for nurses are required for oncology patients.
Marion Regional Medical Center (MRMC) is a nonprofit hospital owned by the Marion County Hospital District, a public body established by statutes with taxing powers in Marion County. MRMC is currently expanding its facilities by
80 beds to the authorized 314-bed hospital pursuant to a CON approved in 1981. The $23 million for that project was financed by revenue bonds issued by Marion County Hospital District. Preliminary bids indicate the original project will be under the estimated cost resulting in a $2-3 million savings. If the additional beds here requested are approved and the construction associated therewith can be accomplished concurrently with the present construction, a saving of nearly $1 million can be obtained.
MRMC is the only full service hospital in Marion County and provides medical, surgical, obstetrical, pediatric, psychiatric, intensive care, coronary care, and neurological/neurosurgical services. It has the third most active Emergency Room in the state and receives approximately 45 percent of its admissions through this service.
MRMC's proposed project calls for the construction of a sixth floor on the hospital, construction of 66 inpatient beds, and the conversion of a 20-bed pediatric unit for use as a labor and delivery suite, a net gain of 46 beds. As initially proposed, this would provide for eight additional pediatric beds, four pediatric intensive care beds, and 34 medical-surgical beds to be used as a pulmonary medicine unit. Before the hearing the request for additional pediatric beds was withdrawn, leaving a request for 34 additional hospital beds and four pediatric intensive care beds, a total of 38 medical-surgical beds, at a cost of $2.8 million.
It was stipulated that both MCH and MRMC provide an acceptable quality of care and operate efficiently. The application satisfied the criteria in Section 381.494(6)(c) with the possible exception of need, and need is the only issue in dispute in these proceedings.
Both applicants submitted evidence that they accept all patients regardless of their ability to pay; however, MCH is a private for-profit hospital whose bad debt and charity care amounts to two percent of its gross revenues. MRMC's patient load is four percent indigent and bad debts, and charity care amounts to 12 percent of its gross revenues. Exhibit 18 shows MCH patient utilization to be 61 percent Medicare and one percent Medicaid, and MRMC patient utilization to be 51 percent Medicare and five percent Medicaid, in 1981.
There is currently "applicable district plan" or "annual implementation" as provided for in Section 381.494(6)(c)1, Florida Statutes (1982). The implementation of this statute has been stayed by rule challenges.
The North Central Florida Health Planning Council, Inc. (NCFHPC), was the Health Systems Agency (HSA) for what was formerly known as Health Service Region II which included only Marion County as a district sub-area. Prior to the July 1, 1982, amendment of Florida's CON law, the HSA reviewed applications and made recommendations with written findings of fact to DHRS. The 1982 CON law eliminated HSA, accordingly the NCFHPC no longer exists. The former HSA recommended approval of the applications of both MCH and MRMC; however, the staff of the HSA recommended disapproval of both applications.
For the determination of need in these proceedings, a planning horizon of five years is acceptable and was used by all parties. Thus, the need for the requested CON is assessed for the year 1988. At this time the population of Marion County is forecast to be 165,880.
The percentage of persons 65 and older in Marion County is increasing in proportion to the remainder of Marion County's population, and this increase will continue through 1988. This "aging" of the population is occurring throughout the United States as people live longer and demographics change with differing birth rates at differing periods. No evidence was submitted that the percentage of people over 65 is greater in Marion County than in other parts of Florida.
MCH has 190 authorized medical-surgical beds and MRMC has 244 authorized medical-surgical beds, for a total of 434 such beds authorized in Marion County in two hospitals across the street from each other in Ocala, Florida.
With the 1982 amendment to the CON statute the HSA in Marion County ceased to exist and has been replaced by a local health council. Rule challenges have stayed the promulgation of a comprehensive state health plan and the only Health Systems Plan in being for Marion County is the revised 1983 Health Systems Plan (HSP). This plan was approved by the HSA for Marion County in June of 1982 and contains goals, objectives and standards for planning for the health services required in Marion County. Standard 1-1 provides the need for medical-surgical beds within each Level II planning area (Marion County) should be based on the actual 1980 medical-surgical bed need per 1,000 population in this area. Standard 2-1 provides no additional beds should be added to a community's total bed supply until the occupancy rate of medical- surgical beds in the community exceeds 85 percent if more than 200 such beds are available in the community. The generally accepted standard for occupancy rate above which more beds may be needed is 80 percent. However, where beds are concentrated in one area, which is the case in Marion County where 434 medical- surgical beds are authorized, 85 percent occupancy leaves a reasonable surplus of beds to cover most emergencies or unusual situations that would cause the bed availability to be exceeded.
The need for medical-surgical beds per 1,000 population (use rate) in Marion County in 1980 was 2.41. The HSP has a goal of 3.5 beds per 1,000 population and an objective of 4.0 beds per 1,000 population by 1987 in Region
II. Applying the 1980 use rate to the 1988 forecast population of Marion County results in a need for 400 medical-surgical beds.
The Health Systems Plan update for Marion County defines medical- surgical beds as all hospital beds which are not reserved solely for the use of pediatric, obstetrics, or psychiatric patients. At the time the revised Health Systems Plan for Marion County was promulgated, the two hospitals, MRMC and MCH, had been authorized an additional 80 and 65 beds, respectively, and these beds were being placed in service. By prescribing a use rate for 1980 as the standard to be used in considering applications for additional medical-surgical beds in 1983 and for a year or two thereafter, it would be reasonable to conclude the HSA expected the use rate for the years 1981 and 1982 to be influenced by the addition of the recently authorized 144 beds and to not accurately reflect a reliable use rate for planning purposes.
MRMC and MCH presented expert witnesses who, by using different modalities, containing different assumptions, arrived at a need for additional beds in Marion County in 1988 ranging from 97 to 200. Most of these modalities used an occupancy rate of 3.5 beds per 1,000 population and 80 percent utilization of beds. All assume increasing usage of medical-surgical beds by the increasing and aging population.
In their application MRMC and MCH planned to finance these projects with rate increases of 11 percent per year (to keep even with inflation) and a continuing increase in the number of patients handled at these higher rates. While inflation may again be up to 11 percent or higher, it is generally accepted today that the current inflation rate is five percent or less. More than 50 percent of both MRMC and MCH patients are presently covered by Medicare, which pays 80 percent of the charges generated by these patients. To assume that this situation will not only continue in the face of current federal deficits, but grow to cover the increased use of these facilities predicted in the assumptions used to show increased bed need for 1988, is not necessarily a valid assumption.
Evidence was presented that the number of doctors in Marion County has doubled in the last five years. The ratio of doctors to the population of Marion County for 1977-78 and 1982-83 was not presented nor was the percent increase in the number of doctors in the United States over the past five years. Without some basis for comparison, the fact that the number of doctors in a particular community doubled over a five-year period has no relevancy.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.
Section 381.494(4), Florida Statutes, provides the application for a certificate of need shall contain certain information including:
A detailed description of the proposed project and statement of its purpose and need in relationship to the applicable health systems plan, annual implementation plan, and state health plan adopted pursuant to Title XV of the Public Health Service Act.
Section 381.494(6)(c), Florida Statutes (1982), establishes certain criteria to be used by Respondent in reviewing applications for certificates of need. These include:
1. The need for the health care facilities and services and hospices 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, except in emergency circumstances which pose a threat to the public health.
At the time these applications were presented to DHRS, the 1982 CON was in effect, the local HSA was no longer in business, no applicable district health plan, implementation plan, or state health plan had been promulgated as
intended by the provisions of the statute above-quoted. Petitioners contend that because Respondent has no state health plan, the local health council has not adopted a district plan or annual implementation plan, and the HSA has been discontinued, the Health Systems Plan approved by the HSA for Marion County is not a document that needs to be followed by Respondent; and, if Respondent does follow this document it must prove the need, independent of the health systems plan, for every provision therein used.
Rule 10-5.11, Florida Administrative Code, establishes criteria to be used in evaluating and acting on CONs. This rule tracks Section 381.494(6)(c)1. above-quoted except the words "Health Systems Plan" are used in the rule in place of the words "District Plan" in the statute. Since this rule was last amended February 1, 1981, the rule obviously was not issued to comply with the 1982 CON amendment, but to comply with the predecessor statute. The similarity of the language in the rule to that of the statute would lead to the conclusion that the words "District Plan" were intended to replace "Health Systems Plan" since the Health Systems Agency had been replaced by a local health council directed to develop a district plan. A review of Section 381.494(6)(c)1., Florida Statutes (1981) confirms this conclusion.
From this it is concluded that until a district plan is developed and promulgated, the Health Systems Plan in existence June 30, 1982, will remain the plan used to weigh the merits of CON applications. The other conclusion that could perhaps be reached is that until the district and state health plans have been promulgated no CONS can issue since DHRS has no authority to issue a CON to an applicant unless the application is in accordance with these plans.
On the other hand Respondent contends that the HSP promulgated by the HSA for Marion County not only is applicable to these proceedings but also its terms are binding upon DHRS. Accordingly, standards 1-1 and 2-1, as noted in Findings of Fact 15 above, preclude the issuance of a CON for either of these hospitals when these standards are followed. While this argument is not without merit, evidence was submitted that Respondent has issued CONs in the past when all of the requirements of the HSP were not met. One of Petitioner's arguments was that their last CONs were issued by Respondent even though not fully justified by the HSP. Respondent's principal witness who made the final decision in these cases and in the present cases testified there is not a cut and dried formula to which every application can be subjected and from which the decision to issue or not issue a CON emerges. Most of these determinations involve the exercise of judgment and experience on the part of the person making the agency's decision to grant or deny the application. Once such a determination is made by the agency, it carries an aura of correctness which the Petitioners here must overcome in order to succeed.
Petitioners' contention that, in the absence of a district plan or state health plan as required by the 1982 CON statute, Respondent must explicate and prove the validity of the reasons given for denying the CONs is without merit. The burden of proof is on Petitioners to show, by a preponderance of the evidence, the need for an additional 100 beds exists in Marion County over and above the 144 beds authorized just over two years ago.
In none of the modalities used by Petitioners to show bed need was the
85 percent occupancy rate or the 1980 use rate utilized. Both of these factors were used by Respondent in determining to deny these applications. Since the HSA for Marion County was the only HSA to prescribe use of the 85 percent occupancy rate for hospitals in communities having more than 200 medical- surgical beds, this figure may be slightly suspect. Since HSAs are comprised of
people living in the service area with knowledge of the health needs of the area, the services available and where located, the 85 percent occupancy rate established for hospitals having a combined total of more than 200 beds in a community is not necessarily wrong. A special situation exists with respect to these Petitioners in that they are located across the street from each other, share medical staff, tend to specialize in services they provide, and apparently do not truly compete with each other. If need is recalculated based on the use rate determined from an occupancy rate of 80 percent, the number of medical- surgical beds needed in Marion County in 1988 would increase from 400 to 424, the same number now authorized.
Despite the testimony of doctors, hospital employees, and potential patients that additional medical-surgical and surgical intensive care beds are needed, the HSP for this area (Marion County), knowing that 144 beds had been authorized for these two hospitals in 1980-81, a number that increased the authorized medical-surgical beds some 40 percent to the present 424, concluded that the 1980 use rate should be used to determine the need for additional medical-surgical beds, at least in 1983. Although the same group that adopted the HSP updated for 1983 voted to approve both of these applications, the professional staff, who prepared the HSP, voted to disapprove both applications because these applications are not consistent with the guidelines in the HSP.
Petitioners' contention, that the HSP should not be relied on by Respondent because it has never been adopted as a rule, is not the currently authorized district plan, and by using it Respondent is in effect developing policy through adjudication, is also without merit. The HSP here under attack has been used to determine health care needs in the health service area of these Petitioners for several years, its use was directed by statute (prior to the 1982 modification), and it has provided the criteria against which applications for certificates of need in Marion County have been weighed since the promulgation of the first HSP more than ten years ago.
From the foregoing it is concluded that MRMC and MCH have failed to prove, by a preponderance of the evidence, that the criteria used by DHRS in denying their applications for certificates of need are wrong or incorrect and have otherwise failed to show that additional medical-surgical beds are needed in Marion County now or will be needed by 1988. It is therefore
RECOMMENDED that these petitions be dismissed and the applications of Munroe Regional Medical Center and Marion Community Hospital for certificates of need to add 38 and 62 medical-surgical beds to their facilities be denied.
ENTERED this 10th day of May, 1983, at Tallahassee, Florida.
K. N. AYERS, Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway
Tallahassee, Florida 32301
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 10th day of May, 1983.
COPIES FURNISHED:
Fred W. Baggett, Esquire and
Michael J. Cherniga, Esquire Post 0ffice Drawer 1838 Tallahassee, Florida 32302
Thomas A. Sheehan, III, Esquire Post Office Box 3888
West Palm Beach, Florida 33402
Donna H. Stinson, Esquire Barnett Bank Building, Suite 858 Tallahassee, Florida 32301
James M. Barclay, Esquire Department of Health and Rehabilitative Services
1317 Winewood Boulevard, Suite 256
Tallahassee, Florida 32301
David H. Pingree, Secretary Department of Health and Rehabilitative Services 1321 Winewood Boulevard
Tallahassee, Florida 32301
Docket for Case No: 82-002757
Orders for Case No: 82-002757
| Issue Date |
Document |
Summary |
|
May 10, 1983 |
Recommended Order
|
Petitioners didn't show additional hospital beds were needed or that the formula used to compute the need was improper/insufficient. Dismiss.
|
