STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HUMANA OF FLORIDA, INC. d/b/a ) WOMEN'S HOSPITAL TAMPA, )

)

Petitioner, )

)

vs. ) CASE NO. 83-932

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on August

15 and 16, 1983, in Tallahassee, Florida. The issue for determination in this proceeding is whether petitioner is entitled to a Certificate of Need to construct a new fifth floor addition to its existing facility and to add 34 obstetrical beds, 12 of which would be designated as a formal artepartum unit.

APPEARANCES

For Petitioner: John H. French, Jr., Esquire

James C. Hauser, Esquire Messer, Rhodes & Vickers Post Office Box 1876 Tallahassee, Florida 32302

For Respondent: Claire D. Dryfuss

Assistant General Counsel 1323 Winewood Boulevard Building One, Room 406 Tallahassee, Florida 32301

INTRODUCTION

In support of its position that petitioner is entitled to a Certificate of Need to construct a new fifth floor and add 34 obstetrical beds, petitioner presented the testimony of seven witnesses and its Exhibits 1 through 4, 6A, 6B and 8 were received into evidence. Testifying for the petitioner were Dr. Byron Metts and Dr. Robert W. Yelverton, both of whom were accepted as expert witnesses in the fields of obstetrics and gynecology; Dr. Eugene Ruffalo, an expert in the fields of pathology, obstetrics and gynecology; David Klein, an expert in the field of hospital administration; William J. Serow, an expert in the field of demography; Mark Richardson, an expert in the field of health planning; and Thomas J. Konrad, the former Administrator of the respondent's Office of Community Medical Facilities.

Thomas J. Konrad also testified on behalf of the respondent and was accepted as an expert witness in the area of health planning. Respondent's Exhibits 1 through 3 were received into evidence.

Subsequent to the hearing, the petitioner and the respondent filed proposed findings of fact and proposed conclusions of law. To the extent that the parties' proposed findings of fact are not included in this Recommended Order, they are rejected as not being supported by competent substantial evidence adduced at the hearing, irrelevant or immaterial to the issues in dispute or as constituting conclusions of law as opposed to findings of fact.

FINDINGS OF FACT

1. Upon consideration of the oral and documentary evidence adduced at the hearing, as well as the stipulation of facts entered into by the parties, the following relevant facts are found:

   
   

2. Humana of Florida, Inc., a wholly owned subsidiary of Humana, Inc., is the owner of Women's Hospital in Tampa. Women's Hospital presently has 192 licensed beds, of which 96 are used for obstetrical patients and 96 are used for gynecological patients. It is dedicated to meeting the physical, psychological, educational, social and environmental needs of women and newborns and offers a total program of obstetrical, neonatal and gynecological care. Although not designated by the State as a Level III facility, Women's Hospital in Tampa has the personnel and equipment necessary to provide Level III care. It treats many high-risk obstetrical patients and their newborns, as well as premature infants. High-risk infants do not require transfer to another hospital with Level III capabilities. Every practicing obstetrical/gynecological physician in Tampa is on the staff of Women's Hospital.

   
   

3. Petitioner submitted an application for a Certificate of Need to add a fifth floor to its existing facility and to increase its licensed obstetrical bed complement from 96 beds to 130 beds. Of the 34 additional obstetrical beds requested, 12 are to be allocated to an antepartum unit. These 12 beds would be organized as a separate self-contained unit to care for obstetrical patients experiencing or likely to experience a complicated pregnancy and/or delivery. The types of obstetrical patients who would utilize a separate antepartum unit would include diabetics, patients who experience difficulties with blood pressure, kidney disorders and conditions associated with the heart and thyroid. In many instances, the antepartum patient is ambulatory or quasi-ambulatory and is thus able to meet many of her own needs. As a result, the intensity of nursing care in an antepartum unit is lower than that which would be expected in a postpartum obstetrical unit, resulting in a cost-savings to the antepartum patient. The total proposed capital expenditure for the addition of a fifth floor and 34 obstetrical beds is approximately $2.8 million.

   
   

4. While petitioner is licensed for 96 obstetrical beds, only 62 of those beds were in operation at the time of the final hearing in this proceeding. Based on the 62 beds in operation, the average obstetrical bed occupancy rate was 112 percent from September, 1982 through August, 1983. Due primarily to the temporary discontinuance of obstetrical services at St. Joseph's Hospital located across the street from petitioner, occupancy levels have reached 130 percent since January of 1983. Such occupancy levels create significant problems in terms of patient care and facility, physician and nursing efficiency. The difficulties associated with scheduling surgery and infection control are exacerbated with overcrowded conditions. Because newborns and postpartum mothers are more susceptible to infection, it is medically necessary

   to separate and segregate postpartum and gynecological patients. Petitioner had 4,600 deliveries last year and projects it will have 5,800 deliveries this year. If all 96 obstetrical beds were currently in operation, petitioner's occupancy levels would be approximately 70 percent. An indication of adequate utilization of obstetrical beds is an average annual occupancy level of 75 percent.

   Petitioner expects to reach the 75 percent occupancy level of its existing licensed 96 beds within the next year and a half to two years.

   
   

5. Petitioner presently has no private obstetrical rooms at its facility. When a patient requires isolation from other patients, one of the beds in the semiprivate room is not available for use. Due to high occupancy levels, petitioner is unable to offer a private room to any of its obstetrical patients when it is not medically necessary to do so. Thus, even without the addition of

   34 beds, petitioner desires to construct a fifth floor to allow it to reconfigure its units and convert a number of semiprivate rooms into private rooms by transferring existing licensed beds to the fifth floor. This would enhance the hospital's ability to utilize its bed complement in a more efficient manner. Even without additional beds, petitioner's Executive Director believes that by amortizing construction costs over a period of 20 to 25 years and reducing its operating margin, there would not be a significant impact upon patient charges as a result of the fifth floor addition. Should petitioner be granted a Certificate of Need allowing it to construct a fifth floor with no new beds, petitioner would be willing to accept conditions concerning the conversion of existing semiprivate rooms to private, such as capping over medical gas outlets, deactivating wall outlets and light fixtures for a second bed and furnishing the new rooms on the exclusive basis of a private room.

   
   

6. The conversion of semiprivate rooms to private rooms could be a less costly alternative to the addition of new beds in some instances. To the extent that the addition of private beds provides a potentiality for greater utilization of existing services, additional patient revenues can be generated. It is not the policy if the Department of Health and Rehabilitative Services to grant approval for "shelled in" or "banking" space due to the potential competitive advantage it affords by allowing a future increase of beds without significant cost.

   
   

7. Petitioner has the ability to adequately staff its proposed project with all necessary technical, nursing, and medical personnel, and will provide an acceptable level of patient care. Sufficient funds are available to construct and operate the project and the project has immediate and long-term financial feasibility. Its costs and methods for the proposed construction are reasonable, appropriate, and cost-efficient.

   
   

8. The respondent HRS has promulgated Rule 10-5.11(23), Florida Administrative Code which establishes a uniform methodology for determining the number of acute care hospital beds needed five years into the future within the eleven HRS service districts throughout the State. The Rule addresses the need for general medical and surgical, intensive care, pediatric and obstetrical acute care services in hospitals and the Department will not normally approve applications for additional beds if the new beds would cause the number of beds in a particular district to exceed the number calculated to be needed under the Rule's methodology. Rule 10-5.11(23) calculates need through a series of formulas by considering the need for the various types of individual services and then adding these figures together to produce a figure indicating the total number of acute care beds which would be needed in a particular District within a five-year time frame. Then, after certain adjustments, all existing licensed and approved acute care beds are subtracted from the total bed need to determine

   the net bed need within the District. Subdistrict allocations by type of service are to be made by the individual Local Health Councils consistent with the District total acute care bed allocations, with certain adjustments permitted. As of the date of the hearing in this cause, the Sixth District's Local Health Council's plan for the allocation of beds on a service specific or subdistrict basis had not been adopted.

   
   

9. The acute care bed need methodology set forth in Rule 10-5.11(23) takes into account the population for the service area projected five years into the future, the historic utilization rate for particular types of service, average lengths of stay, optimal occupancy rates for the various types of services, and, with regard to obstetrical bed projections, the fertility rate of women between the ages of 15 and 44. The Rule sets forth the manner in which the figures for these various components are to be derived. Utilizing the methodology for determining acute care bed need as set forth in the Rule, District VI presently has 950 acute care beds in excess of the beds projected to be needed in the year 1988. By applying the subportion of the Rule relating to obstetrical beds to Hillsborough County, there are presently 47 obstetrical beds in excess of the number needed for 1988.

   
   

10. While the petitioner agrees with the basic generic form of the methodology contained in Rule 10-5.11(23), petitioner would substitute different data than that mandated under the Rule and perform certain adjustments. For example, petitioner would adjust the numbers used in the formula by increasing the statewide fertility rate for the years 1979-81 by 5 percent, by factoring in a number of 2 percent to 3 percent to represent the in-migration of obstetrical patients, by increasing the statewide average length of stay from 3.5 to 3.8 days so as to reflect the actual experience at petitioner's facility, by making an adjustment for hospital stays by an obstetrical patient which do not result in a delivery and by making a downward adjustment for those births which do not occur in a hospital setting. Petitioner would also subtract from the number of existing and/or approved beds the 15 obstetrical beds at St. Joseph's Hospital which were taken out of service on an interim basis as of December 31, 1982, pending the development of a comprehensive plan for the delivery of obstetrical services on a decentralized basis. The parties to this proceeding have stipulated that St. Joseph's Hospital contemplates that its future obstetrical service will be centered around birthing rooms, rather than actual labor, delivery and recovery rooms, and that it is reasonable to expect that, once the service is resumed, approximately 360 deliveries will occur with this number increasing over time. After making all these adjustments and utilizing different data in the formula for determining need, petitioner concludes there is a 1988 need in District VI for 26 or 27 additional obstetrical beds. Petitioner's analysis of bed need based both on an institution-specific analysis and a trend analysis resulted in a finding of from 32 to 36 additional beds needed at petitioner's facility by the year 1988.

    
    

    CONCLUSIONS OF LAW

    
    

11. The criteria applicable to and determinative of petitioner's application for a Certificate of Need are set forth in Section 381.494(6)(c), Florida Statutes, as amended, and the applicable rules adopted pursuant thereto. The parties have stipulated that the only criteria in dispute in this proceeding is the actual need for additional obstetrical beds and the availability, efficiency, appropriateness, accessibility, extent of utilization and adequacy of like and existing health care services in the service area.

12. Respondent's Rule 10-5.11(23) , Florida Administrative Code, sets forth the manner in which the need for additional acute care beds, including obstetrical beds, is to be determined for each of the eleven service Districts in the State. Petitioner contends that this Rule is not applicable to its application for two reasons. First, it is contended that petitioner's facility is so unique that the general acute care bed need rule does not apply. This contention fails in light of the fact that the Rule specifically includes obstetrical beds. The fact that petitioner chooses to limit its services to female patients and specialize in diseases and conditions of the female reproductive organs and pregnancies does not render petitioner a "specialty" hospital. There was no evidence that other hospitals in the District do not perform, along with other services, the same or similar obstetrical and gynecological services as those offered at petitioner's facility. Petitioner also argues that Rule 10-5.11(23) is inapplicable to this proceeding because of the absence of a duly promulgated Local Health Plan for District VI. While the Rule does contemplate the development and existence of District health plans as does Section 381.494(7) , Florida Statutes, the methodology set forth in the rule for determining total acute care bed need in a particular District is not incapable of application by HRS without such District plans. The local plans, when adopted, will simply allocate the total number of beds by types of services and sub-districts within the district. Here, use of the Rule's methodology illustrates an excess of 950 total acute care beds for District VI in 1988. Petitioner offered no evidence to the contrary. Even had the Local Health Council developed a specific subdistrict and type of service allocation, it would be bound by the District total acute care bed allocation and by the need methodology for each particular service set forth in Rule 10-5.11(23). Petitioner presented no competent evidence that the factors giving rise to the adjustments permitted in the Rule with regard to seasonal or peak demand periods or geographic accessibility are a particular problem or concern with respect to the additional beds sought in this proceeding.

    
    

13. In summary, the uniform methodology set forth in Rule 10-5.11(23) for determining the District need for acute care beds, which include obstetrical beds, is applicable and controlling in this proceeding. The Rule is quite specific as to the derivation of the numbers to be utilized in the application of the various formulas. To allow an applicant to supplant those numbers with numbers derived from its own expert health planners, demographers or institution-specific experiences, and to make further adjustments not permitted

    under the Rule would frustrate the very purpose of the Rule, which is to provide a uniform methodology for determining need on a statewide and District basis.

    If an applicant or other interested person is concerned with the propriety of the methodology or the manner of making the various calculations mandated in the methodology, the proper manner of raising that issue is by a rule-challenge proceeding pursuant to Section 120.56, Florida Statutes.

    
    

14. As noted above, application of the Rule results in a finding that there are 950 acute care beds in District VI in excess of the 1988 need for such beds. Application of the subportion of the Rule relating to obstetrical beds results in a finding of 47 excess obstetrical beds in Hillsborough County for the year 1988. Even if one were to subtract the 15 discontinued beds at St. Joseph's Hospital, there would still be an excess of 32 obstetrical beds. There is no need for additional obstetrical beds in District VI at this time.

    
    

15. The fact that Women's Hospital in Tampa may or may not be able to fill additional beds at its facility is not at issue in this proceeding. Health care planning is to be done on a service area or community basis. Institution- specific health A-care planning is not appropriate and has been consistently

    rejected by the respondent HRS in the absence of compelling circumstances. Petitioner, who bears the burden of proof in this proceeding, has failed to demonstrate that any of the factors in the remaining criteria for approval of Certificate of Need applications are present in this case to sufficiently counterbalance the criteria relating to the need for additional obstetrical beds in District VI.

    
    

16. There being no need for additional beds, it must now be determined whether that portion of the application regarding a fifth floor addition should be approved. While approvals of identifiable portions of an application arc permitted, Section 381.494(8)(c), Florida Statutes, petitioner has again failed to demonstrate that its proposal to add a fifth floor at a cost of some $2.8 million meets the criteria for approval set forth in the statutes and rules. While the reconfiguration of units and conversion of semiprivate rooms to private rooms may indeed aid the petitioner in more efficiently utilizing its existing facility, that, in itself, is not a sufficiently compelling reason to disregard the other criteria. As stated above, health care planning is not to be considered on an institution-specific basis. Even if it were, petitioner presently has the capacity to perform obstetrical services at a less than optimal level for the next year and a half to two years. Petitioner has failed to present sufficient evidence regarding the availability, quality, accessibility and adequacy of similar obstetrical services in its health service area that would justify granting it a potential competitive advantage when the need for beds arises in the future. As clearly indicated in the statement of legislative intent which prefaces the Certificate of Need law in Florida, the question of need for additional facilities and services is to be evaluated in terms of the community at large. Section 321.493(2), Florida Statutes. While institution-specific goals and problems are to be considered in evaluating the factors of cost containment and quality of care, it is the community need which must be met and provided for in health care planning. The potential impact of making additional beds available in a community where there is no need must be considered. While petitioner's proposal may result in insignificant increases in charges to its own patients, other facilities experiencing less than optional utilization could lose patients to petitioner's facility, thereby affecting their own patient charges and quality of care. There simply has been no demonstration that any factor other than petitioner's own institution specific need and desire would justify the approval of a capital expenditure of $2.8 million for the addition of a fifth floor at this time.

RECOMMENDATION

Based upon the findings of fact and conclusions of law recited above, it is RECOMMENDED that petitioner's application for a Certificate of Need in its entirety be DENIED.

Respectfully submitted and entered this 2nd of December, 1983, in Tallahassee, Florida.

DIANE D. TREMOR

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 2nd day of December, 1983.

COPIES FURNISHED:

John H. French, Jr., Esquire & James C. Hauser, Esquire Messer, Rhodes & Vickers

P.O. Box 1876

Tallahassee, Florida 32302

Claire D. Dryfuss Assistant General Counsel 1323 Winewood Blvd.

Bldg. 1, Room 406

Tallahassee, Florida 32301

David Pingree Secretary

Department of Health & Rehabilitative Services

1323 Winewood Blvd.

Tallahassee, Florida 32301

Docket for Case No: 83-000932

Orders for Case No: 83-000932