Judges: D. R. ALEXANDER
Agency: Agency for Health Care Administration
Latest Update: Dec. 06, 1983
Summary: Application for Certificate of Need (CON) to add acute care beds approved.
83-0811.PDFSTATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
NME HOSPITALS, INC., d/b/a ) SEVEN RIVERS COMMUNITY HOSPITAL, )
)
Petitioner, )
)
vs. ) CASE NO. 83-811
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, a formal hearing was held in the above case before the Division of Administrative Hearings by its duly designated Hearing Officer, DONALD R. ALEXANDER, on September 9, 1983, in Tallahassee, Florida.
APPEARANCES
For Petitioner: C. Gary Williams, Esquire and
Michael J. Glazer, Esquire Post Office Box 391 Tallahassee, Florida 32301
For Respondent: Jay Adams, Esquire
Building One, Room 406 1323 Winewood Boulevard
Tallahassee, Florida 32301 INTRODUCTION
On November 7, 1982, petitioner, NME Hospitals, Inc., d/b/a Seven Rivers Community Hospital, 1/ filed an application with respondent, Department of Health and Rehabilitative Services, for a certificate of need to add fifteen acute care beds to its hospital in Citrus County, Florida. The application was ultimately denied by respondent on February 28, 1983, when it issued its state action agency report. That report generally advised that the application was being denied because "the proposed project (was) not consistent with the Goals, Standards, and Objectives of the HSP." Thereafter, petitioner filed a petition for formal administrative hearing on March 1, 1983 requesting a formal hearing pursuant to Subsection 120.57(1), Florida Statutes. The matter was referred to the Division of Administrative Hearings by respondent on March 17, 1983, with a request that a Hearing Officer be assigned to conduct a hearing. By notice of hearing dated April 12, 1983, the final hearing was scheduled for September 9, 1983, in Tallahassee, Florida.
At the final hearing petitioner presented the testimony of Claude M. Harbarger, the facility's administrator, Majorie R. Turnbull, Department deputy assistant secretary for health planning, Robert J. Greene, an expert in health
care planning, and Michael Gallo, assistant vice president of finance of the parent corporation. It also offered petitioner's exhibits 1-4 and 6-8; all were received in evidence. Respondent presented the testimony of Thomas J. Konrad, Department administrator of community medical facilities, and offered respondent's exhibits 1 and 2; both were received in evidence.
The transcripts of hearing (two volumes) were filed on September 19, 1983.
Proposed findings of fact and conclusions of law were filed by the parties on October 3, 1983 and have been considered by the undersigned in the preparation of this order. Findings of fact not included in this order were considered irrelevant, immaterial to the results reached, or were not supported by competent and substantial evidence.
Pursuant to a prehearing stipulation, the parties have agreed that petitioner has satisfied all statutory criteria except those enumerated in Subsections 381.494(6)(c)1.,2. and 11., Florida Statutes (1982 Supp.).
The issue herein is whether petitioner's application for a certificate of need to add fifteen acute care beds to its hospital in Citrus County, Florida should be granted.
Based upon all of the evidence, the following findings of fact are determined:
FINDINGS OF FACT
Background
Petitioner, NME, Inc. d/b/a Seven Rivers Community Hospital, operates a Level II hospital facility on Highway 19, approximately six miles north of Crystal River in Citrus County, Florida. It is located in HRS District No. 3. The facility has been in operation since August, 1978.
On November 12, 1982, petitioner filed an application with respondent, Department of Health and Rehabilitative Services, for a certificate of need to add fifteen acute care beds to its facility at a total cost of $37,231.34. The application was denied by respondent on February 28, 1983, on the following grounds:
The major reason for denial is that the proposed project is not consistent with the Goals, Standards and Objectives of the HSP. There is an excess of 28 medical/surgical beds in Planning Area IV by 1987. Overall occupancy in the two county area averaged 71.2 percent in 1981. The addition of 122 beds at Lykes
Memorial and Bayonet Point Hospital, Inc., should, in the foreseeable future, satisfy demand for beds in the area.
The denial prompted the instant proceeding.
The hospital is classified as a Level II facility and currently has 75 beds consisting of 67 medical 1/surgical beds and 8 intensive care unit/critical care unit (ICU/CCU) beds. It is accredited by the Joint Commission on Accreditation of Hospitals. The facility provides a wide range of services
including a 24-hour emergency room, pharmacy, respiratory therapy department, laboratory with clinical and pathology sections, a radiology department with nuclear medicine, ultrasound, regular radiographic and flourscopic units, and a mobile CT scanner. However, it does not provide open heart surgery, radiation therapy, renal transplantation, or obstretic and pediatric services. The staff has specialists in the areas of opthalmology, cardiology, pulminology, gastroenterology and general and peripheral vascular surgery. A large majority of these services and resources are provided to people who live within HRS District No. 3.
At the present time there are 206 existing or approved acute care beds licensed for operation in Citrus County. The only other licensed facility in the county Is Citrus Memorial Hospital in Inverness. It presently has 131 acute care beds.
Planning Area IV, in which petitioner's facility lies, includes Citrus and Hernando Counties. The latter county has one existing hospital, Lykes Memorial Hospital, with 161 acute care beds, and one hospital approved for construction, HCA Health Services of Florida, Inc. HCA was recently authorized
96 acute care beds and expects to open a new facility in Spring Hill, Florida in 1986.
Petitioner's Proposal
Petitioner proposes to add fifteen beds by converting fifteen private rooms to semiprivate rooms. This can be done quickly and inexpensively since the rooms already have the appropriate square footage, lighting and electrical systems to accommodate the conversion. If the application is approved, the conversion project can be completed in about two weeks at a cost of only
$37,231.34.
The hospital has historically experienced seasonal fluctations in its patient occupancy rates. Typically, the large influx of winter visitors and residents has caused its occupancy rates to increase during the winter months while a tailing off has occurred between April and September. However, in 1983 this trend changed and the so-called traditional "slack period" occurred only in the months of May and July, when the occupancy rate fell below 75 percent. Indeed, during the first four months of 1983 the rate was in excess of 92 percent, which is well above the 80 percent optimum occupancy standard used by the Department. This in turn has caused long waiting periods in the emergency room by patients waiting for a bed and postponements by persons seeking to have elective surgery.
Based upon historical annual growth patterns experienced during the years 1979 through 1983, which is the most current and representative data, petitioner expects to have an annual growth rate of almost 12 percent in patient days during the years 1984 through 1988. This in turn will create the need for
57 additional beds by the year 1988. Even if the potential loss of patient days caused by the opening of the new hospital in Spring Hill in 1986 is considered, petitioner will still need 46 additional beds by 1988. In this regard, it considers the 15 bed addition sought herein as an interim measure, and intends to file another application for additional beds in the near future. The granting of the application will alleviate the overcrowding conditions in an extremely cost-efficient manner.
Proposed Department Rule 10-16.004
The Department has proposed a new Rule 10-16.004 which contains the Local Health Plan for HRS District 3. 2/ The rule was published in Volume 9, No. 22, Florida Administrative Weekly, page 1954. The proposed rule was developed by the local health council in District 3. The council has proposed to eliminate the five planning areas within District 3 and to establish in lieu thereof seven separate subdistricts. Under the new proposal, Citrus County would be the only county in Subdistrict 5. The rule projects a total acute care bed need of 260 beds in 1988 for the Subdistrict, or a net need of 54 beds over the present number licensed for operation in the County.
The time for filing challenges to Rule 10-16.004 has expired and none have been filed. At the time of the hearing the rule was being revised as a result of the amendment (HRS). . .made, which arose out of testimony at the public hearings", and had not yet been filed with the Department of State. The extent and nature of such amendments, if any, were not disclosed.
Department Objections
As noted earlier, the basic reason for denial of the application was that the proposed project was not consistent with the Goals, Standards and Objectives of the Health Systems Plans (HSP). In its state agency action report issued on February 28, 1983, the Department reasoned that because there will be an excess of 28 medical/surgical beds in Planning Area IV (Citrus and Hernando Counties) by 1987, and overall occupancy in the two county area averaged only
71.2 percent in 1981, and new beds will be added at Lykes Memorial and HCA Services of Florida, Inc., the demand for beds in the area should be satisfied.
As further clarified at the hearing, a Department representative indicated the reasons for denying the application included (a) a lack of need,
(b) petitioner's failure to have a Medicaid contract, and (c) petitioner having exceeded certain "screens" of the Hospital Cost Containment Board for 1983 and 1984. However, the latter "problem" was attributable to a lower patient length of stay at Seven Rivers than at other hospitals reviewed by the Board, and for this reason the excesses were acceptable. The Department's principal concern as to the Medicaid issue was that NME, the parent corporation, had an alleged corporate policy of not taking Medicaid patients which is contrary to Department "goals". But petitioner has agreed to enter into a Medicaid provider contract if the application is approved in order to satisfy this objection. Moreover, during fiscal year 1983, the facility had direct patient write-offs of approximately $750,000 which represents uncompensated care to medically indigent individuals. This amount exceeded the level of care given to indigents by Citrus Memorial Hospital, a tax supported hospital in Citrus County, during the same period of time.
Under the methodology contained in Rule 10-5.11(23), Florida Administrative Code, the Department determined there is a projected need for 24 additional acute care beds by the year 1988 in the entire District 3, which encompasses 16 counties. This is based upon a current total of 3,139 beds within the District and a projected total need of 3,163 beds by that date. The record is unclear as to how 20 beds at shands Teaching Hospital in Gainesville now devoted to special psychiatric care for children are classified. If they are classified as acute care, the actual net need for beds within the District is 44 since these beds should not be classified within that category. The Department has not allocated the bed shortage to any particular county or planning area. Therefore, there is no impediment to assigning a portion of that
total to Citrus County. This is especially appropriate in light of petitioner's occupancy rates, the overcrowding which has recently occurred, and the cost efficient manner in which the addition will be completed.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the subject matter and the parties pursuant to Subsection 120.57(1), Florida Statutes.
At the outset, the question of the applicability of proposed Rule 10- 16.004, Florida Administrative Code, to the proceeding should be resolved. Petitioner urges that it should be considered, and for readily obvious reasons. 3/ However, at the time of the final hearing the rule had not yet been formally adopted and filed with the Department of State. The general rule is that licensing matters are ordinarily governed by the law and regulations in effect at the time of final determination. Hialeah Hospital v. Department of Health and Rehabilitative Services, DOAH Case No. 77-2047, Final Order entered October 29, 1979. See also Holladay v. City of Coral Gables, 382 So.2d 92, 96 (Fla. 3rd DCA 1980); Ingerson v. State Farm Mutual Automobile Insurance Co., 272 So.2d 862, 864 (Fla. 3rd DCA 1973). Accordingly, it is concluded the proposed rule has no application to the case at bar.
In determining whether a need for the additional beds in Citrus County exists, the Department must consider those factors set forth in Subsection 381.494(6)(c) and (d), Florida Statutes. As stipulated to by the parties, it is agreed that all statutory criteria have been met except those enumerated in Subsections 381.494(6)(c)1., 2., and 11. They provide as follows:
The need for the health care facilities and services and hospices being proposed in relation to the applicable district 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.
The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospices in the applicant's health service district area.
* * *
11. The needs and circumstances of those entities which provide a substantial portion of their services or resources, or both, to individuals not residing in the health service district in which the entities are located or in adjacent service district. Such entities may include medical and other health professions, schools, multidisciplinary clinics, and specialty services such as open heart surgery,
radiation therapy, and renal transplantation.
In essence, the first Subsection requires that the Department determine whether there is a need for the facility in question. Need is
determined by the uniform methodology set forth in Rule 10-5.11(23), Florida Administrative Code, and the unique local needs of the district in which the facility lies. Subsection 381.494(7), Florida Statutes. Under the rule, a minimum of 24 beds within the District is needed. If the 20 specialty beds at Shands are eliminated from the total available for acute care, the shortage is increased to 44. The `unite local needs" have not yet' been codified by rule, but they will increase, rather than minimize, the shortage in applicant's service area. There is no impediment to allocating a portion of this need (15) beds to Citrus County, particularly in view of the compelling evidence presented by petitioner to support this need. Accordingly, it is concluded that a need for 15 additional acute care beds exists in Citrus County, and the applicant has satisfied the criteria in Subsection 381.494(b) (c)1.
Respondent's only objection concerning subparagraph (c)2. centers around the issue of "access" for the medically indigent to petitioner's facility, and petitioner's alleged failure to provide indigents with such access. Petitioner counters that this issue is addressed in subparagraph (c)8. rather than (c)2., and that because the parties have stipulated out (c)8., Medicaid is not in issue. The paragraphs in question read as follows:
2. The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospices in the applicant's health service district area.
8. The availability of resources, including health manpower, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation; the effects the project will have on clinical needs of health professional training
programs in the service district area; the extent to which the services will be accessible to schools for health professions in the service district area for training purposes if such services are available in a limited number of facilities; the availability of alternative uses of such resources for the provision of other health services; and the extent to which the proposed services will be accessible to all residents of the service district area.
It is obvious that the criteria in subparagraph (c)2. merely require an examination of other facilities and services in the district and do not require consideration of accessibility of Medicaid patients to a proposed facility. It is also clear that, if indeed assessibility to a facility by Medicaid patients is a pertinent consideration, it must fall under subparagraph (c)8. which requires the Department to consider "the extent to which the proposed services will be accessible to all residents of the service district." Moreover, the Department cited no agency final orders which interpret the statutes in this seemingly inappropriate manner. Accordingly, it is concluded that the criteria in subparagraph (c)2. have been met and that access by Medicaid clients to petitioner's facility need not be considered in the instant case.
The final relevant criteria is addressed in subparagraph (c)11. and involves generally the project's impact on "(t)he needs and circumstances" of entities that are located outside the district in which the applicant lies. Because the evidence clearly demonstrates that a large majority of applicant's services and resources are used by persons within the District and will have little, if any, impact on facilities outside its boundaries, it is concluded that the criteria in subparagraph (c)11. have been met.
It is concluded as a matter of law that petitioner has satisfied all statutory criteria for licensure, and that its application for a certificate of need should be granted.
RECOMMENDATION
Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application of NME Hospitals, Inc., d/b/a Seven Rivers
Community Hospital for a certificate of need to add fifteen acute care beds to its hospital in Citrus County, Florida, be GRANTED.
DONE and ENTERED this 21st day of October, 1983, in Tallahassee, Florida.
DONALD R. ALEXANDER
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 21st day of October, 1983.
COPIES FURNISHED:
C. Gary Williams, Esquire and Michael J. Glazer, Esquire
O. Box 391
Tallahassee, Florida 32301
Jay Adams, Esquire Building One, Room 406 1323 Winewood Boulevard
Tallahassee, Florida 32301
David H. Pingree, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32301
Alicia Jacobs, Esquire General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32301
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AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
NME HOSPITALS, INC., d/b/a SEVEN RIVER COMMUNITY HOSPITAL,
Petitioner,
vs. CASE NO. 83-811
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,
Respondent,
/
FINAL ORDER
This cause came on before me for the purpose of issuing a final agency order. On October 21, 1983, the Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above-styled cases has submitted a Recommended Order to the Department of Health and Rehabilitative Services (HRS). A copy of that Recommended Order is attached hereto.
PDCF - meaning HRS Office of Community Medical Facilities - filed Exceptions to the Recommended Order. A copy of PDCF's Exceptions is attached hereto as Exhibit A.
HRS RULING AND STATEMENT ON THE EXCEPTIONS
(AA) PDCF EXCEPTION (2) - The exception is meritorious.
It is self-explanatory and it is correct. The Final Order is so modified.
FINDING OF FACT
The Department hereby adopts and incorporates by reference the findings of fact made by the Hearing Officer, but with the correction set forth by PDCF's Exception (2).
Accordingly,
It is ADJUDGED that the application of NME Hospitals, Inc., d/b/a Seven Rivers Community Hospital, for a certificate of need to add fifteen acute care beds to its hospital in Citrus County, Florida, is granted but with the condition that the Seven Rivers Community Hospital enter into a Medicaid provider contract.
ORDERED this 5th day of December, 1983, in Tallahassee, Florida.
DAVID H. PINGREE
Secretary
Copies furnished to:
C. Gary Williams, Esquire
and Michael J. Glazer, Esquire
P. O. Box 391 Tallahassee, FL 32301
Jay Adams, Esquire Assistant General Counsel Department of HRS
1323 Winewood Blvd.
Tallahassee, FL 32301
Donald R Alexander, Hearing Officer Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, FL 32301
Harden King, Agency Clerk Department of HRS
1323 Winewood Blvd.
Tallahassee, FL 32301
Docket for Case No: 83-000811
Orders for Case No: 83-000811
