STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
FLAGLER HOSPITAL, )
)
Petitioner, )
)
vs. )
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, ) CASE NO. 84-0236
)
Respondent, )
and )
) ST. AUGUSTINE GENERAL HOSPITAL, )
)
Intervenor. )
)
RECOMMENDED ORDER
For Petitioner: Kenneth F. Hoffman and
Robert D. Newell, Esquires Tallahassee, Florida
For Respondent: Douglas Mannheimer, Esquire,
Tallahassee, Florida
For Intervenor: Thomas A. Sheehan, III, Esquire
West Palm Beach, Florida and
Donna H. Stinson, Esquire Tallahassee, Florida
A final hearing was held in this case in St. Augustine, on October 8 and 9, 1984. The main issue is whether respondent, Department of Health and Rehabilitative Services (HRS) should grant petitioner Flagler Hospital (Flagler) a certificate of need to replace and relocate its 131 bed hospital in St.
Augustine, St. Johns County, Florida.
The proposed new location would be about three and one half (3 1/2) road miles from Flagler's present location and about one quarter (1/4) mile from intervenor St. Augustine General Hospital (General) at County Route 312 and
Route 1. Through prehearing and hearing procedures, the main issue has become whether the certificate of need should be granted despite the objections of General and HRS: (1) that the relocation should be disapproved unless Flagler accepts de-licensure of 16 of its current complement of beds and relocates only 115 beds; and (2) that the application should be disapproved because it would be preferable to approve relocation to a site approximately one and three quarter (1 3/4) miles north on U.S. 1 from the proposed site. 1/
FINDINGS OF FACT 2/
Flagler Hospital (Flagler) is a 131-bed, acute care, not-for-profit community hospital, providing acute care for general medical-surgical, obstetric, pediatric, and psychiatric patients. (T. 25-26) The hospital is located near the extreme southern end of the narrow peninsula where Old St. Augustine is located. The proposed new location of the hospital is at County Route 312 and U.S. Route 1. The proposed new location is approximately one and one half (1 1/2) air miles from the current location. (T. 40, 41; Pet. Ex. 3,
6) However, due to the current location near the end of the peninsula, the proposed new location is about three and one half (3 1/2) road miles from the current location.
The proposed new location for Flagler is approximately one and one quarter ( 1 1/4) miles northeast of intervenor St. Augustine General Hospital (General) which also is located on U.S. Route 1 near Route 312. (Pet's. Ex. 3) General is a for- profit hospital owned by the Hospital Corporation of America which does not provide obstetric or psychiatric service and does not have a separate, segregated pediatric service. (T 26)
Flagler now has serious accessibility problems. In the area within one to two miles of the current location, the roads are narrow and indirect, and one of the more direct routes to the hospital is subject to periodic flooding.
Flagler's physical plant is inadequate. It lacks necessary space for the services provided, shows serious signs of its age and is not properly designed for use as a modern hospital.
Location
Flagler's current facility and location are no longer acceptable from a health planning standpoint. Flagler's current hospital needs to be replaced and relocated off the peninsula on which Old St. Augustine is located to a new location on U.S. Route 1 within approximately three and one half (3 1/2) road miles from the current location. 3/
Flagler's current location, Flagler's proposed new location, General, and the intersection of U.S. Route 1 and King Street all are in St. Johns County, which roughly forms the service area of both Flagler (current and proposed) and General. Flagler's current location and the intersection of U.S. Route 1 and King Street are also within the city limits of the City of St. Augustine.
Flagler's current location is more accessible to the people residing on the peninsula within approximately one mile of the hospital -- approximately 3,885 in 1980 according to the 1980 Census. Almost 65,000 people reside in St. Johns County. For the rest of the population of St. Johns County (over 90 percent), the proposed location is significantly more accessible.
In addition, the relatively small population residing within one mile of Flagler's current location has been stagnant and, due to geographical and other constraints, probably will remain stagnant. Meanwhile, the rest of St. Johns County probably will grow steadily (to approximately 80,000 by 1990). One of the fastest growing areas is an area in the northern end of the county called Ponte Vedra. (T. 230) Another major area of growth in the county is the U.S. 1 corridor, south of the City of St. Augustine, sometimes called "the new city." (T 231) This area has experienced between 7 percent and 7.5 percent growth per
year. (T. 231) Very large subdivisions have been platted and recorded in that area. (T 231) The center of population for the county has become the area along U.S. 1 south of the City of St. Augustine. (T. 233) In addition, there is a new project on Anastasia Island called Anastasia Shores which has been growing at the rate of 5 percent per year and has a projected population of 4,000. (T 236) Anastasia Island is east of U.S. 1 and has easy direct access to U.S. 1 along Route 312. (Pet's. Ex. 6) This population growth of "the new city" probably will include approximately a proportionate increase in elderly population since companies such as Deltona Corporation are targeting their housing projects primarily for senior citizens. (T 233) In addition to residential development, business development also is moving south. (T 236)
Flagler's proposed location also is more accessible to Flagler's current indigent patients as a whole. Two-thirds of Flagler's indigent patients reside west of U.S. 1 and would have better access to the proposed location.
The remaining one-third live east of U.S. 1 on the peninsula and would have better access to the current facility. (T 51-52) West of Route 1, in Census Tract 203, the median income was only $12,311 according to the 1980 census.
Directly east of U.S. 1 in Census Tract 204, the median income was only $11,784. But in Census Tract 201, closest to Flagler's current location, the median income is $17,178. 523-524) The homes in Census Tract 201 had a median value of $57,700, the highest average of any census tract in St. Johns County. The average value of houses in the census tracts west of U.S. 1 were slightly over
$20,000. (T. 525)
On the whole, Flagler's proposed location also would be more accessible to Flagler's elderly patients, who require significantly more hospital services than the younger part of the population. Approximately 10,175 people over age 65 will live in St. Johns County in 1985. The elderly population probably will rise to approximately 12,920 by 1990. According to the 1980 Census, only 276 people over the age of 65 live in Census Tract 201, closest to the current location. (T. 517) Census Tract 204, the next closest, includes 665 elderly. Meanwhile, the census tracts closer to the proposed location include 1,762 people over age 65, almost twice the number living in Census Tracts 201 and 204. As the population, particularly the elderly population, grows to the south while the population on the peninsula remains stable, a greater and greater percentage of the elderly will have better access to the new location than to the current location. (T. 519, 527-528)
Blacks and elderly blacks as a whole also would have better access to the proposed location than to the current location. (T. 521-522, 525) More of that segment of the population (approximately two thirds) resides nearer to U.S.
1 than to Flagler's current location.
The evidence suggested that there is no suitable location for a hospital facility along U.S. 1 in the vicinity of King Street. If there were a suitable location in that area, such a location would be only minimally more accessible on the whole than Flagler's proposed location, if at all more accessible. For anyone driving to Flagler a private car or taxi from the peninsula or the parts of the county to the north, having to drive one and three-quarter (1 3/4) miles further along U.S. 1, a major highway, would, in most cases, be a relatively insignificant inconvenience. (There is no public transportation in St. Johns County.) Besides, if Flagler were relocated to the King Street vicinity, the significant residential growth in the far northern part of the county in the area called Ponte Vedra is so far north that most of the residents in that area probably would continue to go to Jacksonville for hospital services. (T. 538) Currently, 17 percent of the patients from St.
Johns County go north to Jacksonville for hospital services. Meanwhile, far more growth can be expected in the area immediately to the south of Flagler's proposed location than can be expected in the area immediately north of a King Street location which is being developed primarily for commercial instead of residential use. (T. 537) The only people for whom a King Street location would have important access advantages over Flagler's proposed location would be the indigent people within a reasonable walking distance of a King Street location.
Flagler's proposed location would have essentially the same service area as General does. But that service area is not much different from the service area of Flagler's current location. Approximately only two of Flagler's current patients per year who are within a 30 minute drive of Flagler's current location would be further north than a 30 minute drive from the proposed location. Most people residing more than a 30 minute drive time north of the current location go to hospitals in Jacksonville. (T. 56-57) Meanwhile, approximately 200 patients who have been coming to Flagler from more than a 30 minute drive from the south would be within a 30 minute drive from the proposed location. (T. 56) Some of these 200 patients are some of Flagler's obstetric or psychiatric patients who are not served by General; others are some of Flagler's indigent patients, more of whom are served by Flagler than by General. Although these 200 patients would have the same access to General as to Flagler's proposed new location, they would in fact have greater accessibility to the hospital of their choice as a result of the relocation.
Flagler's proposed location near General will enhance competition, improving quality of services. A doctor could easily admit his patient to the hospital with the best facilities and services, and both hospitals will be more responsive to the doctors' evaluation of their quality. There would be less of this type competition if Flagler were relocated near King Street and even less than that if Flagler remains in its current location. (T. 59-61, 317) Indeed relocation from the current location is necessary for the long-term viability of Flagler as a competing provider of hospital services in the area.
The closer Flagler and General are, the more likely it will be that the two hospitals could create a kind of health campus that would be more attractive to the residents of the City of St. Augustine and St. Johns County, as well as to physicians. A health campus has the advantage of increasing the possibility that specialists would be attracted to the community, concentrating health resources in the area. (T. 61) For example, at this time there is no board certified cardiologist in the county. (T. 86) If a type of health campus could be arranged, it would improve the possibility that a certified cardiologist would come to the area. (T. 86) Similarly, the location of Flagler's designated pediatric unit, psychiatric unit and obstetric unit in a health campus with General would help the doctors to coordinate the use of these services as required by all residents of St. Johns County. (T. 87) Unnecessary duplication of these and perhaps other services perhaps could be avoided, resulting in reduced costs. As a result, many of the patients in the county who now go north to Jacksonville for hospital services (now approximately 17 percent of the patient population of St. Johns County) might be persuaded that their community can provide the type and quality of services they want, and they might stop going to Jacksonville for these services. (T. 60-61) Flagler's proposed location holds out a much greater potential than a King Street location to create the kind of health campus that, while not perfect, would promote these kinds of advantages. There is little or no potential for these kinds of advantages at Flagler's current location.
Flagler's proposed location and the King Street location both would have approximately the same potential for sharing noncompetitive services such as laundry and educational programs.
Financial Feasibility
The total cost of Flagler's proposed project is approximately
$22,000,000. (T. 149-150) Flagler proposes to finance approximately 90 percent of the cost of the project through a program using bonds insured by the Federal Housing Administration (FHA). (T. 135) The interest rate probably will not exceed eleven percent (11 percent). (T. 244) As FHA-insured bonds, the bonds would probably be rated AA by Standard and Poors, the highest bonding rate that is assigned to health care institutions. (T. 245) The bonds probably will be sold without difficulty, providing the short-term capital needed for the proposed project. (T. 244)
Regarding long-term financial feasibility, Flagler probably will have the financial ability to pay approximately 1.7 times the debt service on the bonds out of its cash flow within a year or two after completion of the project. (T. 621, 752-753) The debt service coverage ratio probably will increase after that. (T. 621) A debt service coverage ratio of 1.7 is considered adequate for conventional financing; a debt service coverage ratio of 1.3 is considered adequate for FHA-insured bonds. (T. 252, 685) The debt service coverage ratio probably will be more than adequate, making the project financially feasible, long term. (T. 252, 637-638) 4/
Numerical Bed Need
Neither the state health plan nor the local health plan authorizes review of numerical bed need in the course of reviewing an application for a certificate of need to replace and relocate a hospital within a service district. (T. 458)
HRS has no other non-rule policy to review numerical bed need in the course of reviewing an application for a certificate of need to replace and relocate a hospital within a service district. (T. 425-444, 473-479) 5/
Effect On General
General did not prove that Flagler's proposed relocation will have a substantial effect on it. Flagler's service area will not change very much at all. It was not proved that any additional duplication of services or any cost increase would be significant. It is just as likely, or more likely, that some current and future duplication of services, both "competitive" and "noncompetitive," can be eliminated through better cooperation and coordination of services if Flagler moves to its proposed location. General's services will continue to be just about as available, quality, efficient, appropriate, accessible, utilized and adequate as they are now.
If Flagler moves to its proposed location, the effects of competition will be likely to reduce the costs to the public of services at both Flagler and General and increase the quality of services at both hospitals. Any adverse effect of the competition on General will be adverse economic impact resulting from General's failure to meet the competition with adequately low cost, high quality services. 6/
CONCLUSIONS OF LAW
Section 381.494(6)(c), Florida Statutes (1983), provides in pertinent part 7/
The department shall determine the reviewability of applications and shall review applications for certificate-of-need determinations for health care facilities and services, hospices, and health maintenance organizations in context with the following criteria:
The need for the health care facili- ties 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 hospic- es in the service district of the applicant.
. . . .
. . . [T]he extent to which the proposed services will be accessible to all residents of the service district.
The . . . long-term financial feasi- bility of the proposal.
. . . .
12. The probable impact of the proposed project on the costs 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 or innovations in the fi- nancing and delivery of health services which foster competition and service to promote quality assurance and cost-effectiveness.
The first criterion relates to the "need for the health care facilities and services. . . being proposed in relation to the applicable district plan and state health plan." (Emphasis added). In this case, Flagler's application proposes a project which would not be reviewable under the following subparagraphs of Section 381.494(1), Florida Statutes (1983):
The addition of beds by new construction or alteration.
The new construction or establishment of additional health care facilities.
. . . .
(e) An increase in licensed bed capacity.
. . . .
(g) A substantial change in health services.
Flagler's application is reviewable only under Section 381.494(1)(c) as a "capital expenditure of $600,000 or more."
The "need" referred to in the first criterion under Section 381.494(6)(c) is framed by the nature of Flagler's proposed project. Under the statutes, as now enacted, the issue in this case under the first criterion is the need for the capital expenditure for replacement and relocation, not the numerical bed need. This interpretation of the pertinent statutes is supported by HRS' past practices. See the Final Order, Lakeland Regional Medical Center
v. Department of Health and Rehabilitative Services and Hospital Corporation of America d/b/a Palm View Hospital, DOAH Case No. 84-1941(DHRS 1984)(Pet. Ex. 1).
There was insufficient evidence to support a finding of HRS non-rule policy to consider bed need in connection with an application such as Flagler's, particularly in light of HRS' past practice to the contrary in the Palm View case. In any event, as the statutes presently read, the validity of such a policy would be questionable. The evidence was that the policy is not contained in the "applicable district plan and state health plan." Section 381.494(6)(c)1. In addition, the alleged policy itself would suggest as preconditions to its implementation that guidelines for CON applicants should be established and that the implementation of the policy should be widely publicized with assistance from the local health councils.
Regarding the second criterion of Section 381.494(6)(c), the evidence is that Flagler's service area at the proposed location would be substantially the same as its current service area. The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, or adequacy of General's health care services do not stand as an obstacle to granting Flagler's application. Flagler's replacement and relocation probably will result in an improvement of Flagler's health care services in all those categories. Nor will Flagler's proposed replacement and relocation have any significant impact on General. How Flagler's replacement and relocation affects General will depend largely on how well General meets the competition from Flagler. See Final Order, Port Richey Medical Center, Inc. v. Department of Health and Rehabilitative Services and Bayonet Point Hospital, Inc., DOAH Case No. 79-2052 (DHRS 1980)(Pet. Ex. 2)(holding that no new or amended certificate of need is even required for a change of site location within the same service area where an apparently minor change in site location, the exact extent of which could not be ascertained from the face of the final order, was made necessary by flood conditions).
Regarding the pertinent part of the eighth criterion of Section 381.494(6)(c), the evidence establishes that Flagler's health care services will be significantly more accessible to more residents in the service area than the current location. Accessibility, on the whole, to the proposed location would be approximately the same as accessibility to a King Street location, assuming one is available.
The ninth criterion of Section 381.494(6)(c) requires consideration of a long-term financial feasibility of the proposal. The evidence proves the long term financial feasibility of Flagler's proposed project. There is, of course, no guarantee of long term financial success. Revenue and expenses can be altered by forces that cannot be reasonably predicted at this time. If the combined effect of those forces is too adverse to Flagler, the project will be a long-term financial failure (or will be a financial success only after Flagler raises its charges to extraordinarily high levels.) But the prospects at this time are that the project probably will be financially successful with
reasonable rate increases. The project is therefore financially feasible. In any event, the start of the actual project after issuance of a certificate of need will be subject to a further final financial feasibility study. (T. 637- 638)
Regarding the twelfth criterion of Section 381.494(6)(c), Flagler's proposed replacement and relocation probably will reduce the cost of health care services by fostering greater competition between Flagler and General and increasing the coordination of health care services of both hospitals to the public. There also is the possibility that the creation of a type of health campus will attract more, and more sophisticated types of, health care services to the area and increase utilization of the services of both hospitals by encouraging area residents to use the services, offered by Flagler and General instead of the services of Jacksonville hospitals. Finally, the evidence suggests that Flagler's replacement and relocation is essential to its long-term viability as a hospital provider in St. Johns County. Therefore, it is concluded that Flagler's proposed project is desirable when measured against the twelfth criterion.
General's Standing. The grant of Flagler's application will add no new or additional beds. Nor is HRS concerned with numerical bed need in this proceeding under the present statutes and rules. See paragraphs 2 through 4, Conclusions Of Law, above.
General did not prove that the availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, or adequacy of its health care services should stand as an obstacle to Flagler's certificate of need. The granting of Flagler's certificate of need will not have any significant adverse impact on those qualities of General's health care services.
Nor would Flagler's replacement and relocation project have any significant adverse impact on the supply of health services being provided by Flagler and General. The change in service area is too small to be of much significance. If anything, the different type of competition between General and Flagler at its proposed location is more likely to have a beneficial effect on the supply and services by the two hospitals. Any adverse impact on General would be adverse economic impact resulting from a failure on General's part to meet the competition with adequately low cost, high quality services. This is not the type of effect from competition with which HRS is concerned under Section 381.494(6)(c)12., Florida Statutes (1983).
For these reasons, General did not prove that any of its interests within the zone of interests under the statutes and rules will be substantially affected by the grant of Flagler's application for certificate of need. General failed to establish its standing as a party in this case. See Agrico Chemical Co. v. Department of Environmental Regulation, 406 So.2d 478 (Fla. 1st DCA 1981), construing Sections 120.52(11) and 120.57, Florida Statutes (1983).
After being reserved at final hearing, ruling is now made that Public Exhibit 1, a certified copy of a deed, is admissible. But notwithstanding the document and other testimony on the subject, Flagler sufficiently proved the feasibility of its plan to sell its current facility to an affiliated corporation for use as an adult congregate living facility. The transaction will be a financial "wash" in that Flagler will provide the funds with which its affiliate will purchase the facility. As reflected in the Findings Of Fact, Public Exhibit 1 did not undermine the financial feasibility of Flagler's proposed project.
After being reserved at final hearing, ruling is made that the "public comment" and "public exhibits" received at the final hearing are admissible under Section 120.57(1)(b)4., Florida Statutes (1983), and Rule 28-5.303(2), Florida Administrative Code, and should be treated in all respects as any other form of testimony or exhibits received at final hearing.
Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that respondent Department of Health and Rehabilitative Services enter a final order: (1) granting Flagler Hospital's application for a certificate of need to replace and relocate its hospital, CON Action No. 2883; and (2) dismissing St. Augustine General as a party for lack of standing.
RECOMMENDED this 25th day of February, 1985 in Tallahassee, Florida.
J. LAWRENCE JOHNSON 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 25th day of February, 1985.
ENDNOTES
1/ Another issue is whether General has party standing.
2/ All parties submitted proposed findings of fact. The proposed findings of fact were reviewed, and the following Findings Of Fact attempt to rule, either directly or indirectly, on each proposed finding of fact. Proposed findings of fact which were approved and adopted are reflected in the following Findings Of Fact. Where proposed findings of fact are not reflected and no direct ruling rejecting them is apparent, the proposed findings of fact have been rejected as being subordinate, cumulative, immaterial or unnecessary.
3/ The parties' Prehearing Stipulation stipulates that Flagler should be replaced and relocated. In their Joint Proposed Recommended Order, HRS and General contend that it would be preferable to relocate Flagler to U.S. Route 1 in the vicinity of King Street, approximately one and three quarter (1 3/4) miles north of Flagler's proposed location.
4/ The testimony of the expert witness called by General and HRS is rejected. He testified that the debt service coverage ratio probably will be as low as
1.21 and therefore inadequate. But he based his projection on unreasonably low utilization rate projections. (T. 734-735) He also incorrectly assumed that revenue projections should be based solely on patient days, ignoring that outpatient charges will be a greater proportion of total charges as patients' average length of stay decreases under the new diagnostic-related group (DRG)
prospective reimbursement systems. (T. 618-619, 747-748) Finally, he miscalculated the DRG reimbursement rates Flagler can expect to receive. This miscalculation alone resulted in a projected debt service coverage ratio 0.42 lower than it should have been. (T. 750-753)
Parenthetically, General's Motion To Strike Portions of Proposed Recommended Order of Flagler Hospital, served January 21, 1985, is denied.
5/ There was testimony suggesting that HRS has a policy to review numerical bed need in cases such as Flagler's application in accordance with a study called "Hospital Bed Utilization And Distribution In Florida -- A Report To The Legislature," dated March 1984. (HRS Exhibit 2) The study was done by the Florida Statewide Health Council and was signed by the Secretary of HRS. But the testimony was not persuasive enough to establish the existence of a policy. The testimony as to the existence of a policy was not definite; nor were the details of the supposed policy.
In some cases, the supposed policy was not readily apparent from the face of the study. In particular, as an example, in one place (page 27) the study addresses the option of encouraging applicants to relocate out of an over-bedded district into an under-bedded district, stressing that such an approach would have to be "applicant-initiated." Elsewhere, on page 29, the study recommends implementation of bed retirement (i.e., relocation of some of the hospital's beds and de-licensure of the rest) in the context of relocation. But the recommendation cites as required action" for implementation: "Minimum acceptable hospital bed exchange rates. . . should be established as a guide to CON applicants. . . . The implementation of this strategy should be widely publicized with assistance from the local health councils to encourage applicant proposals." None of this has been done.
Finally, HRS' past practice as of as late as August 1984 has been not to review numerical bed need in the course of reviewing an application far a certificate of need to relocate a hospital. See Lakeland Regional Medical Center v. Department of Health and Rehabilitative Services and Hospital Corporation of America d/b/a Palm View Hospital, DOAH Case No. 84-1941 (DHRS 1984)(Pet. Ex. 1); Port Richey Medical Center, Inc. v. Department of Health and Rehabilitative Services and Bayonet Point Hospital, Inc., DOAH Case No. 79-2052 (DHRS 1980)(Pet. Ex. 2). No explanation was given why the supposed policy has not been used in the past. Cf. Slip Opinion, Florida Medical Center v.
Department of Health and Rehabilitative Services, Case No. AX-2O, 1st DCA, January 24, 1985.
In light of the absence of any rule or policy making numerical bed need relevant in this case, there is no need to make findings of fact on bed need or occupancy rates. Nor would it be appropriate in this case to make findings of fact relevant to the wisdom of adopting a policy to review numerical bed need in light of the following conclusions of law that such a policy must be implemented through state and local health plans under Section 381.494(6)(c)1., Florida Statutes (1983).
6/ See, Port Richey Medical Center, Inc. v. Department of Health and Rehabilitative Services and Bayonet Point Hospital, Inc., DOAH Case No. 79-2052 (DHRS 1980)(Pet. Ex. 2).
The testimony of General's administrator that General will suffer substantial losses of revenue was not persuasive. First, it assumes that Flagler will get new patients from General but General will get no new patients from Flagler. Second, it assumes that the replacement of Flagler's obsolete facility with a modern facility in a location that could create a kind of health campus among Flagler and General will not attract any of the patients now going to Jacksonville for hospital services. Finally, as found, the effect on General will depend primarily on how well General meets any new competition.
Parenthetically, this finding is not based on the testimony of General's financial expert. He made certain assumptions on this subject for purposes of his financial opinions but did not give competent testimony on the facts he assumed.
7/ The parties' Prehearing Stipulation stipulates that all other criteria to be reviewed in connection with Flagler's application under Section 381.494(6)(c) "are either not applicable or have been met."
COPIES FURNISHED:
Donna H. Stinson, Esquire Thomas A. Sheehan, III, Esquire The Perkins House - Suite 100
118 North Gadsden Street Tallahassee, Florida 32301
Douglas L. Mannheimer, Esquire
318 North Calhoun Street Tallahassee, Florida 32301
Kenneth Hoffman, Esquire
646 Lewis State Bank Building Tallahassee, Florida 32301
David Pingree, Secretary Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32301
================================================================= AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
FLAGLER HOSPITAL,
Petitioner,
vs. CASE NO. 84-0236
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,
Respondent,
and
ST. AUGUSTINE GENERAL HOSPITAL,
Intervenor.
/
FINAL ORDER
This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (hereinafter referred to as "DOAH") in above-captioned case has submitted a Recommended Order to the Department of Health and Rehabilitative Services (hereinafter referred to as "HRS"). A copy of that Recommended Order is attached hereto as Exhibit A.
Respondent, HRS, filed Exceptions to Recommended Order. A copy is attached hereto as Exhibit B.
RULING ON EXCEPTIONS
At the request of the Hearing Officer, as expressed in HRS's exception number 1, paragraph 2 of the findings of fact is modified to reflect that Flagler's proposed location is approximately one quarter mile northeast of St. Augustine General Hospital. HRS's exception number 1 is granted.
HRS's exception number 2 as to paragraph 18 of the Recommended Order is denied. It is not alleged that the finding of fact contained is not supported by competent substantial evidence.
There is no substantial competent evidence to support finding of fact at paragraph 19 of the Recommended Order. HRS does have a policy to examine the number of beds needed when replacement of a hospital is proposed as this is the time when the capital expenditure decision can be affected. HRS's exceptions 3, 5, and 2 as to paragraph 19 of the Recommended Order are granted.
HRS's exception 4 is granted for the reasons stated therein.
FINDINGS OF FACT
Findings of Fact contained in the Recommended Order are hereby adopted and incorporated by reference except:
Paragraph 2 is modified for the reasons set forth in paragraph 1 of the Ruling on Exceptions to Read:
"The proposed new location for Flagler is approximately one-quarter (1/4) mile northeast of Intervenor St. Augustine General Hospital (General) which also is located on U.S. Route
1 near Route 312 (Petitioner's Exhibit 3). General is a for-profit hospital owned by the Hospital Corporation of America which does not provide obstetric or psychiatric services and does not have a separate, segregated pediatric service, (T-26)."
Paragraph 19 is not adopted in this Final Order for the reasons set forth in paragraph 3 of the Ruling on Exceptions.
CONCLUSIONS OF LAW
Paragraphs 1, 2, 6, 7, 8, 10, and 11 of the conclusions of law contained in the Recommended Order are hereby adopted and incorporated by reference.
Paragraphs 3, 4, 5, and 9 are expressly rejected. The following conclusions are made in addition to those adopted:
HRS has a policy that it is appropriate to examine the number of beds needed when replacement of a hospital is proposed because this is the time when the capital expenditures decision can be affected. In determining the number of beds that are appropriate for a replacement hospital, HRS uses the advisory recommendations set forth in the study entitled "Hospital Bed Utilization and Distribution in Florida." This advisory study has been approved by the Florida Statewide Health Council and the Secretary of HRS. In situations where (a) hospitals in an area have occupancy rates below 60 percent and (b) the District and subdistrict have excess beds, where replacement beds are at issue, the study recommends that consideration be given to reducing the number of beds to a level that would achieve a 70 percent occupancy rate based on 1982 and 1983 utilization at the existing hospital. Under this formula Flagler's replacement hospital should have approximately 115 beds.
Subsection 381.494(6)(c)(2) requires a review of this relocation project since it necessitates consideration of the availability, efficiency, appropriateness, extent of utilization and adequacy of like and existing health care services in the applicant's HRS service district. When read in conjunction with the legislative mandate to issue or deny a certificate of need "in its entirety or for identifiable portions of the total project," S 381.494(8)(c), it is appropriate to determine whether or not the entire complement of requested relocated beds are needed. The evidence demonstrated that current occupancy rates and projected bed need do not require a replacement facility of 131 beds.
Given the legislative mandate in S 381.493(2) to give every consideration to "the elimination of unnecessary duplication of health services," a replacement facility of 115 beds, to be comprised of 107 acute care beds and 8 psychiatric beds is appropriate under the circumstances. Other elements of S 381.494(6)(c)(2) will be satisfied by approval of a facility of this size.
It is therefore ADJUDGED that
Flagler Hospital's application for a Certificate of Need to replace and relocate its hospital, CON Action No. 2883, is granted.
The Certificate of Need will reflect a bed complement of 107 acute care and 8 psychiatric beds for a total licensed bed capacity of 115 beds.
DONE and ORDERED this 23rd day of May, 1985, in Tallahassee, Florida.
DAVID H. PINGREE
Secretary
A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF HRS, AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES.
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a copy of the foregoing was sent to the following named people by U.S. Mail at 3:30 P.M. o'clock, this 28th day of May, 1985:
Donna H. Stinson, Esquire Thomas A. Sheehan, III, Esquire The Perkins House, Suite 100
118 North Gadsden Street Tallahassee, Florida 32301
Douglas L. Mannheimer, Esquire CULPEPPER, TURNER & MANNHEIMER
Post Office Drawer 11300 Tallahassee, Florida 32302-3300
Kenneth Hoffman, Esquire OERTEL & HOFFMAN, P.A.
2700 Blairstone Road Suite C
Tallahassee, Florida 32301
J. Lawrence Johnston, Hearing Officer Division of Administrative Hearings The Oakland Building
2019 Apalachee Parkway
Tallahassee, Florida 32301
LESLEY MENDELSON, Agency Clerk Assistant General
Department of HRS
1323 Winewood Boulevard Building One, Suite 407 Tallahassee, Florida 32301 904/488-2381
| Issue Date | Proceedings |
|---|---|
| May 29, 1985 | Final Order filed. |
| Feb. 25, 1985 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| May 23, 1985 | Agency Final Order | |
| Feb. 25, 1985 | Recommended Order | There is no review of numerical need when assessing an application for Certificate of Need (CON) to replace and relocate an existing hospital within the same service district. |
