STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
NME HOSPITALS, INC., d/b/a ) DELRAY COMMUNITY HOSPITAL, )
)
Petitioner, )
)
vs. ) CASE NO. 84-0743
) (formerly consolidated DEPARTMENT OF HEALTH AND ) with DOAH Case Nos.
REHABILITATIVE SERVICES, et al. ) 84-383, 84-702, 84-728
) and 84-911)
Respondent. )
)
RECOMMENDED ORDER, CASE NO. 84-0743
Frank J. Santry, Esquire, and David P. Heath, Esquire, of Tallahassee, and Thomas T. Alspach, Esquire, of Easton, Maryland, for Petitioner, Osteopathic Medical Hospitals, Inc.
Douglas L. Mannheimer, Esquire, of Tallahassee, for Respondent, Department of Health and Rehabilitative Services.
Byron Mathews, Esquire, and Paul Amundsen, Esquire, of Tallahassee, for Intervenor, Martin Memorial Hospital, Inc.
Marbury Rainer, Esquire, of Atlanta, Georgia, for Intervenor, Jupiter Hospital, Inc.
Stephen C. Emmanuel, Esquire, of Tallahassee, for Intervenor, National Medical Enterprises, Inc.
Final hearing in Case No. 84-0743 was held on November 12 through 20, 1985, in Stuart, and on November 21, 1985, in Tallahassee. The parties asked for and received until February 10, 1986 (extended from February 3, 1986, by motion without objection), in which to file their proposed recommended orders.
The issue in this case is whether a certificate of need should be granted to Petitioner, Osteopathic Medical Hospitals, Inc. (OMHI), to construct and operate a 120-bed acute care osteopathic hospital in Martin County, Florida.
The other case numbers set out in the above caption were the subject of a separate final hearing and will be the subject of a separate recommended order. All other cases arising out of the same batching cycle comparative review and previously consolidated with this proceeding already have been resolved either by recommended order of dismissal, by stipulation or by voluntary dismissal and the Division of Administrative Hearings' files on them already have been closed.
There is no impediment to this Recommended Order or to entry of a final order adopting this recommendation. Footnote 1 infra at page 39. In light of recent district court of appeal decisions, some of the parties have indicated that OMHI's application should be considered in yet another comparative hearing
that would include the Humana Women's Hospital application. But none of the parties can be harmed by any procedural error that might result from entry of this Recommended Order or from a final order adopting the recommendation.
Therefore, by Order entered this date, Case No. 84-0743 has been severed from the cases with which it had been consolidated, for entry of this Recommended Order and for further proceedings.
FINDINGS OF FACT
THE APPLICANT
Petitioners Osteophathic Medical Hospitals, Inc. (OMHI), proposes to build a 120-bed acute care osteopathic teaching hospital in the Hobe Sound area of Martin County. Hobe Sound is located in the south-central portion of the county, along the eastern seaboard. The hospital is intended to serve the needs of both osteopathic and allopathic physicians and their patients but will be openly identified and administered as an osteopathic institution. Osteopathic physicians, under the guidance of the current principals of OMHI, will be responsible for recruitment and organization of the professional staff, along with the development and administration of an osteopathic intern and residency training program.
OMHI's application was filed on August 15, 1983, and was deemed complete by Respondent, Department of Health and Rehabilitative Services (DHRS), on October 15, 1983. DHRS reviewed the application and, in January 1984, denied the application. This administrative proceeding followed.
OMHI revised its application twice during the pendency of these administrative proceedings, the most recent revision occurring on October 18, 1985. The most outstanding revision is the involvement of Hospital Corporation of America (HCA) in the proposed hospital and HCA's backing and eventual takeover of the project. The revision also based the need for the project on need projected for January 1, 1991.
OMHI is a Florida corporation, the shareholders of which are three osteopathic physicians practicing in District IX: Dr. Harold Kirsh, Dr. Michael Longo, and Dr. Albert LaTorra. 0MHI is party to a binding contract with Hospital Corporation of America (HCA), under which HCA has agreed that, if the certificate of need is granted, HCA shall acquire the stock of OMHI and, thereafter, shall construct the proposed hospital and operate it as an osteopathic institution, consistent with the representations included in the CON application. HCA had no such interest in this project when the original CON application was filed in August 1983.
OMHI had not intended to involve HCA in this project and, indeed, would have preferred to have proceeded autonomously with development of the hospital. At the time the original application was denied, OMHI had entered into an agreement with a large commercial developer whereby the latter had agreed to finance and construct the hospital if the application were granted. OMHI's original intention was then to employ a professional management company to operate the hospital. When the application was denied, it became necessary to seek another joint venturer to underwrite the anticipated financial burden of the administrative hearing. OMHI representatives contacted various proprietary health care chains to ascertain whether any would agree to underwrite the cost of an administrative proceeding in return for the opportunity to own and operate the new osteopathic facility. OMHI had such discussions with Universal Health Services, Inc. and American Medical International, Inc., in addition to Hospital
Corporation of America. Further, Dr. Kirsh inquired whether Martin Memorial would be interested in a joint venture in connection with Martin Memorial's then pending application to construct a satellite hospital in central Martin County on the condition that this latter proposed facility be open to all licensed osteopathic physicians.
Ultimately, OMHI elected to enter into the relationship with Hospital Corporation of America. In addition to acquiring the stock of OMHI should this application be granted, HCA has agreed to operate the facility as an osteopathic institution, to insure that the professional staff by-laws comport with the requirements of the American Osteopathic Association, to seek accreditation by the AOA, and to implement an osteopathic intern and residency program. For their part, the principals of OMHI agree to assume responsibility for recruitment and staff of the new facility and for supervision and administration of the proposed osteopathic intern and residency programs. The principals of OMHI already have had such experience in connection with their role in the development of the new osteopathic hospital in Wellington, as well as the development of Community (now Humana) Hospital of the Palm Beaches when it was an osteopathic facility. The principals of OMHI also are parties to the contract and would have a continuing right of enforcement.
OSTEOPATHIC MEDICINE AND OSTEOPATHIC TRAINING.
The osteopathic profession emphasizes the delivery of primary care. Approximately 80 percent of practicing osteopathic physicians today are engaged in general/family practice. Although there may be increasing numbers of osteopathic students who seek specialty training, more than 70 percent of the osteopathic students graduating today still go into family practice.
Because of the profession's commitment to the emphasis upon primary care, the curriculum at osteopathic colleges varies significantly from the course of study at allopathic medical schools. Osteopathic schools require all students to take a broad range of clinical and didactic courses, so that the student is exposed to all medical subject matter. Further, during upper class years, each student is required to take rotating "externships" during which he or she concentrates, for months at a time, on different medical specialities at various osteopathic hospitals.
By contrast, the allopathic student typically elects his or her specialty during the medical school years and begins to concentrate on a narrower range of medical subject matter during that time. Upon graduation, the allopathic student continues this specialty training with two or more years of postgraduate training in that particular area. As a result, many allopathic students may complete their entire education without exposure to the broader medical subject matter with which every family physician must have a working familiarity.
Osteopathic postgraduate education is also quite different from the allopathic model. Unlike the allopathic student, who continues his specialty training during his postgraduate years, the osteopathic graduate is required to take a one year "rotating internship" at an osteopathic hospital. Again, the emphasis and point of this internship is to prepare the student for family practice because that preparation is the profession's mission. During the internship, the student is required to serve in all of the major hospital departments, including surgery, internal medicine, OB/GYN, family practice and the ancillary departments.
Allopathic training and postgraduate programs are accredited by the AMA through the Liaison Committee on Graduate Medical Education. The Liaison Committee has no connection with osteopathic postgraduate programs, which are accredited by the AOA.
As a result of this training in general medicine, the osteopathic physician is fully qualified to enter family practice following his or her one- year rotating internship. Florida grants licensure to osteopathic students at that time. In essence, the profession's emphasis on general practice during the student's early medical school years commences his or her "specialty" training in family practice well before graduation and the postgraduate internship.
Osteopathic medicine differs from the allopathic school not only in philosophy, but also in the clinical approach to the musculoskeletal system. Osteopathic physicians are trained not only to treat the symptoms of disease through drug therapy but to view disease as dysfunction in a patient's system as a whole. Thus, osteopathic physicians stress a "holistic" approach to the healing arts with emphasis on nutrition and preventive medicine. The distinctiveness of osteopathic medicine arises from its emphasis upon osteopathic manipulative therapy. Manipulative therapy is taught in osteopathic medical schools and is practiced clinically at osteopathic hospitals as an element of the osteopathic focus on preventive medicine and on treating the body's symptoms as an integrated whole.
HISTORY OF OSTEOPATHIC DISCRIMINATION.
Martin Memorial Hospital is a 336 bed allopathic acute care hospital located in Stuart, Florida. Martin Memorial is located in the northeast section of Martin County and is within the proposed service area of OMHI's planned hospital.
Jupiter Hospital is an allopathic acute care hospital located in northern Palm Beach County, just south of the Martin County line. Jupiter Hospital is located approximately 8 to 10 miles from the proposed site of OMHI's planned hospital.
Growth of the osteopathic profession in Martin County has been impeded by the policies of Intervenors, Martin Memorial Hospital, Inc. (Martin Memorial), and Jupiter Hospital, Inc. (Jupiter Hospital). To some extent, Martin Memorial and Jupiter Hospital are responsible for the shortage of D.O.S (osteopaths) in Martin County and, if OMHI's facility were opened, more osteopathic physicians soon would move to the area.
Both Martin Memorial and Jupiter Hospital had adopted medical staff policies and by-laws intended to preclude osteopathic physicians from qualifying for staff privileges. As Florida law has changed to prohibit this direct discrimination, both adopted new policies which comply with the law but have had the continuing effect of excluding the majority of osteopathic physicians from their respective medical staffs.
Martin Memorial.
In the early 1970's, the Martin Memorial by-laws seemed to permit privileges for osteopathic physicians by allowing an applicant to offer "equivalent training" as a means of satisfying the educational criteria. Nevertheless, when a fully credentialed osteopathic physician applied for privileges in 1973 that application was denied despite the fact that the
applicant presented three letters from allopathic physicians offering "unhesitating" recommendations and documenting his professional skills. In response to that application, the Martin Memorial by-laws were amended to require specifically that an applicant have training approved by the American Medical Association and the Association of American Medical Colleges.
Because osteopathic physicians are trained in schools approved by the American Osteopathic Association, all osteopathic graduates were precluded from staff membership by this provision.
Martin Memorial similarly relied upon its by-law provisions to deny the applications of Drs. Equi and Shefter, two osteopathic physicians who applied for staff privileges in 1976.
In October 1976, Dr. Equi notified Martin Memorial that he had obtained legal counsel and served notice that he intended to challenge the hospital's blanket prohibition of staff privileges for graduates of AOA-approved medical schools. In reaction, the medical staff several months later (January 1977) voted to amend the staff by-laws to permit applications from osteopathic physicians. As with the previous by-laws, however, the new provision had the effect of excluding most osteopathic physicians from the medical staff, since it additionally required all applicants to have two years of postgraduate training recognized by the American Medical Association. As stated above, osteopathic physicians take their postgraduate training at AOA- approved medical schools and hospitals. Although an osteopathic physician may qualify to attend AMA postgraduate programs, in fact few D.O.s choose to do so for example, approximately one percent of the graduating class of SECOM, the Southeastern College of Osteopathic Medicine.
In 1979 a new Florida law was enacted, effective January 1, 1980, requiring all hospitals to accord equal treatment to osteopathic and allopathic applicants for staff privileges. Section 395.0653, Florida Statutes (1979). Accordingly, in February 1980, Martin Memorial amended its by-laws to permit training accredited by the American Osteopathic Association as an acceptable credential for privileges at the hospital. Nevertheless, the hospital retained its prior requirement that all applicants have two years of postgraduate education in order to qualify for privileges.
The practical effect of the two-year postgraduate education requirement was to exclude the majority of osteopathic physicians from staff positions at Martin Memorial. As stated above, approximately 70 percent to 80 percent of all osteopathic physicians enter general practice, and the AOA requires only a one-year postgraduate internship for licensure because of the concentration on general practice during medical school. The exclusionary effect of the two year postgraduate education requirement is reflected in the experience of Martin Memorial itself. Since the by-law provisions seemingly were amended to permit equal treatment in February 1980, only three osteopathic physicians have obtained admitting privileges, and one of those (Dr. Equi) obtained privileges only as a result of litigation. By contrast, there are approximately 170 allopathic physicians on the Martin Memorial staff, of whom
140 are active and associate members.
The earlier discrimination against osteopathic physicians practiced by Martin Memorial, together with the effective exclusion of most osteopathic
physicians from the hospital staff today, has caused an undersupply of osteopathic physicians in the Martin County area. Hospital privileges are essential to the establishment of a medical practice in a community today. Privileges are important not only to provide access to hospital facilities, but also to convey to the public that the physician is "good enough to be on a hospital staff."
Jupiter Hospital.
The first set of medical staff by-laws adopted by Jupiter Hospital in 1979 prohibited osteopathic physicians from staff membership by requiring graduation from a school approved by the AMA's Liaison Committee on Graduate Medical Education and by requiring similar postgraduate training, Like Martin Memorial, Jupiter Hospital agreed to amend its by-laws to permit hospital privileges for D.O.s only when required to do so by changes in Florida law. Nevertheless, when Jupiter Hospital amended those by-laws in 1980, the new provisions relating to osteopathic applications retained the requirement that
D.O. applicants have postgraduate training approved by the Liaison Committee on Graduate Medical Education, and those provisions continue to exist today. (Although HCA provides financial management services at Jupiter Hospital, that corporation has no involvement with the hospital's staff by-laws or the granting and denial of staff privileges.)
Dr. Harold Kirsh, who lives in the northern Palm Beach County area, has encountered difficulty because he is unable to obtain staff privileges at Jupiter Hospital. Although Dr. Kirsh received two years of postgraduate training in his specialty, he was denied privileges at Jupiter because that training was approved by the American Osteopathic Association rather than the allopathic Liaison Committee on Graduate Medical Education. As a result, Dr. Kirsh has been unable to treat friends, neighbors, and patients in the northern Palm Beach County area who prefer to seek treatment at a hospital near their homes. Proximity to a hospital is a critical factor in a patient's selection of a physician.
Osteopathic specialists, although they receive more than one year of postgraduate training, similarly are discouraged from applying for allopathic hospital staff privileges by the two year postgraduate requirement. Because osteopathic specialists rely upon osteopathic general practitioners for referrals, osteopathic specialists are not likely to locate in areas in which the existing hospitals limit access by osteopathic general practitioners.
The effect of Jupiter Hospital's past discrimination against osteopathic applicants, and current by-laws indicating that osteopathic physicians who do not have two years of postgraduate training approved by the Liaison Committee on Graduate Medical Education will not be admitted to the staff, is reflected in the fact that only four or five osteopathic physicians have privileges at Jupiter on a medical staff of approximately 140 allopathic physicians (including at least one Bonnie Hubicz, D.O. whose post-graduate training was not approved by the Liaison Committee despite provisions in the By- Laws requiring Liaison Committee approval.)
Even if the many osteopathic general practitioner graduates in Florida today desired to obtain more than one year of postgraduate training in family practice, only three or four residency slots offering two years of such postgraduate family practice training are available in the entire state.
DHRS.
OMHI did not prove that DHRS discriminates against osteopaths or has been purposefully obstructionist in the face of applications for certificates of need for osteopathic facilities. The evidence only proves: (1) that, from its enactment in 1972 as Chapter 72-391, Laws of Florida (1972), DHRS interpreted Section 381.494(2), Florida Statutes, contrary to the interpretation ultimately given by the District Court of Appeal, First District, by its decision in the Gulf Coast case on December 16, 1982; (2) that DHRS has not yet promulgated a rule methodology for determining osteopathic bed need; and (3) that, on a case- by-case basis, DHRS recently has changed the utilization assumptions it has used in determining osteopathic bed need in the face of declining average length of stay and occupancy rates for osteopathic (as well as allopathic) hospitals. No discriminatory intent or effect is inferred from these facts.
NEED FOR FACILITY.
State Health Plan and District Health Plan.
The 1985 Florida State Health Plan provides little guidance with regard to an osteopathic hospital, whether or not a teaching hospital.
Page 22 of the Plan establishes the policy guide that "a holistic concept of health is espoused which views man's well-being as a function of the complementary interaction of mind, body, and environment. The holistic concept of health places emphasis on promotion of well-being and prevention of illness." As was previously discussed, osteopathic medicine is founded on the holistic concept of medicine. The development of additional osteopathic facilities and training for osteopathic physicians advances this policy guide of the 1985-87 State Health Plan.
Additionally, the State Health Plan notes the applicability of Section 381.494(2), Florida Statutes (1979), and its distinction between allopathic and osteopathic medical practices.
Neither the State nor the District IX Health Plan specifically address numerical need for osteopathic hospitals and services. But both address the problem of acute care overbedding and optimal occupancy rates for such facilities. Those portions of the Plans apply equally to osteopathic and allopathic hospitals.
The acute care section of Volume II of the 1985-87 State Health Plan emphasizes the ever growing problem and societal expense caused by excess acute care beds in the State. It states that "the combined effect of ambulatory surgery, HMOs, DRGs, and other innovations could reduce acute care bed need for (1989) by 15 percent or more," with the result being fewer acute care beds needed statewide than existed in 1984. The State Health Plan also contains the goal that all acute care hospitals in each district of the state attain an average annual occupancy rate of 80 percent by 1989.
The Acute Care Section of the 1985 District IX Health Plan states that the overall annual licensed bed occupancy rate for acute care general hospitals in District IX should equal 80 percent. The local health plan also states that before needed new beds may be approved, the average annual occupancy rate of the applying facility for the most recent calendar year, and the corresponding subdistrict average, should equal or exceed 80 percent. Although this section of the local health plan only addresses "needed beds," as determined by Rule 10-
5.11(23), Florida Administrative Code, its minimum required average occupancy should apply equally before any new acute care beds, including new osteopathic beds, are approved. In 1985, The District IX Local Health Council raised its recommended occupancy levels for medical surgical beds (and its required minimum occupancy before "needed" new beds may be approved) from 75 percent to 80 percent.
Citing the Florida Hospital Bed Utilization and Distribution Study, the 1985-87 State Health Plan notes that the concentration of surplus beds occurs primarily in four geographical areas: District IV (Jacksonville), District VI (Tampa), District x (Ft. Lauderdale), and District XI (Miami). The study notes that Districts VI and XI alone accounted for 57.1 percent of the total projected surplus in the state in 1983. The four districts cited accounted for 87.9 percent of the state's bed surplus.
The Existing Osteopathic Facilities and Services.
Wellington Medical Center is an approved, 120 bed osteopathic hospital in Palm Beach County.
Humana Hospital Palm Beaches is listed as an osteopathic hospital in the 1985-86 Yearbook and Directory of the Florida Osteopathic Medical Association.
Humana Hospital Palm Beaches is listed as an accredited osteopathic hospital in the American Osteopathic Association's 1984-85 Yearbook of Osteopathic Physicians.
The American Osteopathic Association, Division of Accreditation, on October 15, 1985, directed a letter to Jennings, Ryan, Federa & Co. which stated:
The institution Humana Hospital Palm Beaches 3 was surveyed and examined by a survey team earlier this year. The Committee on Hospital Accreditation examined the survey report and made a recommendation for continuing approval of the institute that was acted upon
by our Board of Trustees at its July, 1985 meeting.
The Humana Hospital Palm Beaches is accredited by the American Osteopathic Association and has an internship program that is also accredited by that organization.
Approximately 22 percent of the admitting medical staff at Humana Hospital Palm Beaches is composed of osteopaths. Of 150 total on the staff in 1983, 50 were osteopaths. Now 50 of approximately 200 on the staff are osteopaths.
Humana Hospital Palm Beaches' governing board has one D.O. member and one M.D. member.
Approximately 44 percent of Humana Hospital Palm Beaches' patient admissions in February 1985 were by D.O.s. The hospital's D.O. admissions are "approximately 50/50."
The medical staff by-laws of Humana Hospital Palm Beaches provide that the position of chairman of each department be held by an osteopath every other year. The chairman and vice- chairman, one of whom is an allopath and one of whom is an osteopath, rotate positions annually. Similarly, the office of chief of staff is alternated between an allopathic and an osteopathic physician.
Humana Hospital Palm Beaches has an Osteopathic Methods and Concepts Committee which meets regularly. It has an organized Department of Osteopathic and Family Medicine. There is also an Accreditation Committee whose duties include assuring "that the hospital is presently, and in the future, in compliance with the accreditation standards of the American Osteopathic Association."
Humana Hospital Palm Beaches (Humana) has numerous attributes of an osteopathic hospital. Based on the testimony and record of this proceeding, there is little difference between the osteopathic attributes of Humana Hospital Palm Beaches and the osteopathic attributes proposed for OMHI's proposed hospital. From a health planning standpoint, osteopathic services rendered at Humana Hospital Palm Beaches should be counted among the available osteopathic services in District IX.
Humana has always had osteopathic manipulation tables. The hospital's osteopathic internship program is currently training eleven interns.
The reason Humana responded to OMHI's interrogatories stating that it is not an osteopathic facility was its administrator's understanding that "osteopathic hospital" meant totally osteopathic with no allopathic participation.
Although the Humana Hospital's obligations to maintain AOA accreditation and to operate an intern program for osteopathic physicians are the result of a law suit settlement Humana has no plans to discontinue the AOA accreditation or the intern training program. There is no basis to assume that Humana will discontinue the osteopathic services now offered.
Under the terms of that settlement agreement, Humana's compulsion to operate an intern program lapses this year. Similarly, Humana's obligation to refrain from any effort to amend the medical staff by-laws, which provide for the rotation of department chairmanships between M.D.'s and D.O.'s, terminates five years after the settlement date (1987).
In addition to the Humana and Wellington facilities, osteopathic services are offered at other area acute care hospital that have osteopaths on their staffs, including Martin Memorial and Jupiter.
Bed Need.
In part, OMHI proposes two supply-based methods for use in projecting the number of osteopathic beds needed in District IX. A supply-based method attempts to project bed need by multiplying a physician use rate by the number of physicians projected to be practicing in an area in the future. For several reasons, the statewide supply-based methods OMHI proposes are unreliable.
First, in general it is more appropriate to base need projections on population use rates and projected population. It is the sick portion of the population represented by the population use rates and population that generates bed need, not the supply of physicians (whether allopathic or osteopathic.) Generally, it should be assumed that physicians follow the sick population, not vice versa.
Second, it is more accurate to project population than it is to project the number of physicians expected to be practicing in an area. Being a much smaller group than the population as a whole, projections of the number of osteopaths expected to be practicing in an area in the future are more affected by variables other than passing of time than are population projections. In addition, because the current number of osteopaths in District IX is significantly influenced by the variables of past allopathic hospital staff privilege policies, as discussed above, it is even more difficult to project the number of osteopaths expected to be practicing in District IX in the future. Adding to this inherent unreliability, OMHI's expert witness may not have plotted the data points correctly in performing his regression analysis, a significant error when one has only ten data points with which to work.
Third, a statewide supply-based method must assume that the percentage of physicians who do not actively practice in the area in question is the same as the percentage of physicians who do not practice in the area used to obtain the physician use rates. For example, as of November 1985, there were approximately 121 osteopaths in Districts IX, but only 88 were practicing. The use rate used by OMHI in its statewide supply-based method is a use rate for osteopathic hospitals throughout Florida. There was no evidence that the same percentage of active osteopaths in District IX, i.e., approximately 73 percent, obtains statewide.
Fourth, the osteopath use rate incorporated in OMHI's statewide supply-based method includes both osteopath and allopath admissions at osteopathic hospitals throughout the state. The method must therefore assume that there is one osteopath admission at an allopathic hospital for each allopath admission included in the admission statistics of the osteopathic hospitals. There is no evidence supporting the validity of this assumption, but the assumption is reasonable given the limitations of the available data.
OMHI also, in part, proposes a type of supply-based method for determining osteopathic bed need referred to as the "Wellington rate." The "Wellington rate," so called because it was used by OMHI to support its application to construct the Wellington osteopathic hospital in Palm Beach County, actually uses the statistics generated at Humana Hospital Palm Beaches.
The Wellington rate isolates osteopath admissions at the Humana Hospital and applies the resulting use rate to the projected number of osteopaths expected to be in District IX in the future. It therefore does not suffer from the weakness noted in paragraph 53(d.) above. But it does share the other weaknesses of a supply-based method set-out in paragraph 53., plus one. The problem referred to in paragraph 53.(c) above is exacerbated in OMHI's "Wellington rate method" because it uses only 33 heavy admitting osteopaths to generate its osteopath use rate but multiplies the resulting use rate by all osteopaths expected to be in District IX in the future, whether admitting, active or inactive. OMHI'S Wellington rate method therefore assumes that all the osteopaths expected to be in District IX in the future will be active and just as heavy admitters as the 33 heavily admitting osteopaths now on the staff of the Humana Hospital, the only osteopathic hospital in District IX at this
time. Such an assumption is unreasonable. It is more reasonable to assume that, if the Wellington rate is used, future osteopathic bed need will be the product of the Wellington rate and the number of admitting osteopaths projected to be actively practicing in District IX on the relevant planning horizon.
As alluded to earlier, a population-based method for determining bed need generally is preferable to a supply- based method. But because of the limitations of available data, the population-based method used in part by OMHI to project osteopathic bed need has weaknesses, too.
Because there is only one hospital in District IX that has a substantial number of osteopath admissions, the choice of population-based use rates is between a "Wellington" population-based rate and a statewide osteopath admission rate. If the statewide rate is used, it assumes that the statewide use rate "fits" District IX. There was no evidence supporting this assumption. To the contrary, the evidence was, e.g., that use rates in 1984 at osteopathic hospitals in the state (excluding irrelevant obstetrical and psychiatric admissions where possible) varied from a low of approximately 12.5 patient days per 1,000 population in District VI to a high of 113 in District V, with an average of approximately 45.
Because the statewide osteopathic use rate is obtained from the use rates at osteopathic hospitals, as is the rate for the statewide supply-based method, it shares with that supply-based method the weakness of requiring an assumption that there is one osteopath admission at an allopathic hospital for each allopath admission counted among the admissions at the osteopath hospital.
Finally, population-based methods share with supply-based methods the difficulty of trending declining use rates forward to the relevant planning horizon.
Each of three methods statewide supply-based, the Wellington rate, and statewide population-based have weaknesses which make it unwise to determine osteopathic bed need exclusively-on any one of them. The most rational approach is to average the three in the hopes of obtaining the best projection. There was insufficient evidence on which to conclude that the average should be weighted in any way.
The best population-based approach available from the evidence in the record would use a statewide use rate of 42.39 patient days per 1,000 population. This use rate is derived by taking twice the total patient days at all AOA accredited hospitals in Florida, excluding irrelevant obstetrical and psychiatric admissions to the extent possible, for the first half of 1985 and dividing the total by the total population of the districts in which those hospitals are located.
Using Tampa Bay Community Hospital, not AOA accredited, as part of the data base to generate the use rate is specifically rejected as unreasonable; likewise, not using Humana Hospital Palm Beaches, under the facts of this case, is specifically rejected as unreasonable. In addition, it is not reasonable to include irrelevant obstetrical and psychiatric admissions in the numbers generating the use rate. On these points, the testimony of Martin Memorial's expert, Judy Horowitz, is accepted, and the contrary testimony of OMHI's expert, Phillip Taylor, and HRS' expert, Elizabeth Dudek, is rejected.
The formula for using the statewide population-based use rate of 42.39 to projection bed need is:
Bed Need = 42.39 patient days x Population divided by 1, 000
365 days/yr divided by 80 percent occupancy standard
Population for District IX is projected to be: 1,145,423 on July 1, 1988
1,218,311 on July 1, 1990
1,235,361 on January 1, 1991
Using the formula, osteopathic bed need under the statewide population-based method would be:
166 on July 1, 1988
177 on July 1, 1990
179 on January 1, 1991
For comparison purposes, if the use rate were obtained by dividing the total patient days by the population only of the counties, instead of districts, in which the hospitals are located, the bed need would be:
233 on July 1, 1988
248 on July 1, 1990
251 on January 1, 1991
The "old" Wellington rate first suggested by OMHI for use in projecting osteopathic bed need is obsolete and should not be considered. The "new" and more appropriate Wellington rate is 618 patient days per osteopath. But OMHI proposes to multiply that rate by the total of all osteopaths projected to be in District IX on the relevant planning horizon although the "new" Wellington rate is generated by dividing total osteopathic patient days at the Humana Hospital only by the admitting osteopaths. This methodology is rejected. It results in an unreasonably high bed need projection. Instead, the "new" Wellington rate should be multiplied only by the number of admitting osteopaths expected to be practicing in District XI on the relevant planning horizon.
No party explicitly offered a method of projecting the number of admitting osteopaths expected to be practicing in District IX in the future. However, there was evidence that, of the 121 osteopaths registered by the Department of Professional Regulation as residing in District IX on November 1, 19B5, only 33 were the heavily admitting osteopaths whose admissions from January to June 1985 resulted in the "new" Wellington rate. Using Horowitz' linear regression analysis, which is specifically accepted as more reliable than Taylor's (since Taylor could not testify whether he plotted the ten data points correctly), the number of admitting osteopaths expected to be practicing in District IX in the future can be projected by the formula:
Y 33 + 0.756 X
where Y number of osteopaths
And X number of months after January 1985
Using that formula:
Y on July 1, 1988 33 + 0.756(42) 65
Y on July 1, 1990 33 + 0.756(66) 83
Y on January 1, 1991 33 + 0.756(72) 87
Multiplying the "new" Wellington rate of 618 by the number of admitting osteopaths expected to be practicing in District IX yields the following bed need projections:
Bed Need 7/1/88 618 patient days x 65 D.O.s divided by D.O.
365 days/yr 80 percent occupancy standard = 138
Bed Need 7/1/90 618 patient days x 83 D.O.s divided by D.O.
365 days/yr 80 percent occupancy standard = 176
Bed Need 1/1/91 618 patient days x 87 D.O.s divided by D.O.
365 days/yr 80 percent occupancy standard = 184
Finally, there is evidence supporting a statewide supply-based method of projecting osteopathic bed need. The statewide use rate of 313.24 admissions per osteopath suggested by Horowitz is specifically accepted as more reasonable than the use rate of 369.2 suggested by Taylor and Dudek. See paragraphs 61 and
62 above. Since the statewide use rate is obtained by dividing total osteopathic admission by total osteopaths registered with the Department of Professional Regulation, it is appropriate to multiply the statewide use rate by the total number of osteopaths Horowitz' linear regression analysis projects will be in District IX on the relevant planning horizon. Again, Horowitz' linear regression analysis is preferred as more reliable than Taylor's.
The statewide supply-based method described in paragraph 70 yields the following results:
Bed Need 7/1/88 313.24 patient days x 141 D.O.s divided by D.O.
365 days/yr 80 percent occupancy standard = 151
Bed Need 7/1/90 313.24 patient days x 159 D.O.s divided by D.O.
365 days/yr 80 percent occupancy standard = 171
Bed Need 1/1/91 313.24 patient days x 164 D.O.s divided by D.O.
365 days/yr 80 percent occupancy standard = 176
The results of the three applicable osteopathic bed need methods population-based, statewide supply-based, and Wellington rate supply-based, as revised based on the evidence in this case can be summarized:
Population- Statewide Supply- Revised Wellington Average Based Based Rate Supply-Based
7/1/88 166 | 151 | 138 | 152 |
7/1/90 177 | 171 | 176 | 175 |
1/1/91 179 | 176 | 184 | 180 |
Since there already are 120 approved osteopathic beds at Wellington and approximately 81 of the Humana Hospital's 162 beds are used to render osteopathic services, there is no raw bed need for OMHI's proposed 120-bed osteopathic hospital.
Area hospitals have a high seasonality factor of approximately 122 percent of average. Occupancy in a hospital above 90 percent at any time created quite a few problems with regard to a patient's ability to receive inpatient care. Any time one deals with an occupancy rate above 90 percent, particularly when some rooms are semi-private, one must be concerned about the type of patients, infectious disease control, and other serious problems that can arise in terms of ability to admit a patient. But the peak season high utilization still does not justify the addition of 120 beds in District IX.
It would be more accurate to subtract beds at an osteopathic facility filled by allopathic physicians from osteopathic bed inventory. But it is impossible to do this from the evidence in this case. The only osteopathic hospital in District IX (excluding Humana) is not yet operating. In addition, it would logically follow that a pro rated portion of all osteopathic admissions at all allopathic hospitals in District IX also would have to be added to the inventory, an impermissible result under the law. Consideration of the beds at the Humana Hospital serving osteopathic patients is based on the uniqueness of the Humana Hospital, as more fully described above.
Health Planning Horizon.
Because of the length of lead time necessary to plan new construction of a 120-bed hospital facility and to open the facility to the public, it is reasonable from a health planning viewpoint to determine whether a new hospital is needed based upon the need for the facility projected five years from the completion date of the application or, if there are formal administrative proceedings, five years from the final hearing in the administrative proceedings.
DHRS has in the past followed a non-rule policy of projecting need for all acute care hospitals, allopathic and osteopathic, five years into the future from the completion date of the application or, if there are formal administrative proceedings, from the final hearing in the administrative proceeding.
There was no evidence that DHRS has decided whether or how to re- formulate its policy in light of the recent decision in Gulf Court Nursing Center vs. Department of Health and Rehabilitative Services, 10 FLW 1983 (Fla. 1st DCA 1985), clarified on rehearing, 11 FLW 437 (February 14, 1986.)
Other Need Considerations.
Although the evidence was that only approximately 10 percent of the population as a whole prefers to use osteopathic physicians, the evidence demonstrates a shortage of osteopaths in Martin County. Past history of discrimination and current staff privilege policies at area hospitals have contributed to the shortage, as previously explained in more detail. Only three osteopaths are on Martin Memorial's staff of approximately 173 physicians, and Jupiter Hospitals's staff of approximately 145 physicians includes only 4 or 5 osteopaths. There are only two osteopaths in all of St. Lucie County. OMHI's proposed osteopathic hospital would attract osteopaths to the area and help alleviate the shortage.
There also is a shortage of osteopathic internship and residency programs. Only eight of the fifteen osteopathic hospitals in Florida have internship programs. (In addition, the osteopathic Wellington hospital being built by OMHI will have an internship program with the Southeastern College of Osteopathic Medicine.) Those programs cannot accommodate Florida graduating osteopaths, much less the net influx of out-of-state graduates who desire to intern in Florida. Only three to four osteopathic hospitals in the country offer residency programs for osteopaths, one of which fortunately is located in Florida. OMHI's proposed teaching hospital with internship and residency programs might help meet the need for such programs. However, low and declining utilization at existing osteopathic facilities will adversely impact the viability of osteopathic intern programs already existing in Florida. A hospital with a low utilization rate would have difficulty supporting such a program. Stated conversely, a hospital with adequate utilization of 75 percent or more would have more opportunity to train students. Currently, only eight of the fifteen osteopathic hospitals in Florida are able to offer such programs. Given the decline in osteopathic utilization which will be discussed below, the approval of OMHI's proposed hospital could further decrease utilization at existing and approved osteopathic facilities and jeopardize the existing program at Humana and the proposed program at Wellington, as well as OMHI's own proposed program.
OMHI did not prove that it has studied and found not practicable less costly and less efficient alternatives for meeting the need for osteopathic internship and residency programs in Florida. Those alternatives include the expansion or formation of internship and residency programs at the existing Florida osteopathic hospitals, especially the seven which have no such programs at this time. The other alternative would be for HCA to operate one or more of its existing allopathic hospitals in manner similar to the way in which Humana Hospital Palm Beaches is operated. If, for example, HCA's Port St. Lucie or Lawnwood Memorial Hospital, both in St. Lucie County, could be operated as Humana Hospital Palm Beaches is, HCA could help meet the need for osteopathic hospital beds and internship and residency programs in District IX in a less costly and more efficient manner.
ACCESSIBILITY.
The only substantial and persuasive evidence on accessibility to osteopathic services and hospitals was that most of Martin and all of St. Lucie and Indian River Counties would be more than a thirty minute drive from Humana Hospital Palm Beaches and the proposed Wellington Hospital. This would be more than 10 percent of the total population of District IX.
However, OMHI did not prove that a thirty minute drive time is the appropriate standard for geographic accessibility to osteopathic services and hospitals. Nor did OMHI prove that such accessibility to 90 percent of the total population of the district is the appropriate standard in this case. Although DHRS has by rule made geographic accessibility within a 30 minute drive time in urban areas for 90 percent of a district's population the standard for all acute care hospitals under Rule 10-5.11(23)(i), Florida Administrative Code, those standards cannot logically be used to measure osteopathic accessibility since only approximately 10 percent of the population prefers to use osteopathic physicians. There was no competent proof what osteopathic geographic accessibility standard should be applied in this case. Nor was there proof that there are no osteopathic facilities or services in adjoining districts that are accessible to remote parts of District IX. Finally, there was no proof how accessible OMHI's proposed hospital would be to the most northern parts of District IX.
Nor was there proof that the Rule 10-5.11(23)(I) standard for accessibility to acute care hospitals (either allopathic or osteopathic) is not satisfied in District IX. The evidence suggested that the standard is satisfied.
OMHI estimates that 2.5 percent of its patients will be Medicaid patients.
UTILIZATION.
Utilization of acute care hospitals is declining. The reasons for the decline are the dramatic changes which the health care industry has undergone since 1983. The primary reason has been the shift in 1983 to the Medicare prospective payment system, otherwise known as DRGs. The DRG system changed Medicare reimbursement from cost base to a set reimbursement based on type of illness. The effect of this change has been primarily to sharply decrease the average length of stay of Medicare patients. Other causes of decline in utilization include an increased emphasis on utilization review and the use of outpatient services such as outpatient surgery and home health services. In many areas of the country, preferred provider organizations (PPO's) and health maintenance organizations (HMO's) also have impacted hospital occupancy rates significantly, lowering lengths of stay and admission rates. As specifically recognized by the State Health Plan, "the emergence of these alternative delivery systems ... have exacerbated declining occupancy rates."
In District IX, average lengths of stay have declined in acute care hospitals as follows:
1983 6.9
First half of 1984 6.5
1984 6.2
First half of 1985 6.2
During the same time periods, occupancy rates in District IX acute care hospitals have declined as follows:
1983 73.7
First half of 1984 72.3
1984 65.8
First half of 1985 64.7
Statewide, average lengths of stay in osteopathic hospitals have declined as follows:
1983 7.9
First half of 1984 7.1
July 1, 1984 thru
June 30, 1985 6.9
During the same time periods, occupancy rates at osteopathic hospitals throughout the state have declined as follows:
1983 | 50.4 | |
1984 | 43.3 | |
July | 1, 1984 thru | |
June | 30,1985 | 39.9 |
Meanwhile, at Humana Hospital Palm Beaches, the only hospital in District IX with significant osteopathic admissions, average lengths of stay declined as follows:
1983 7.7
1984 6.8
First half of 1985 7.4
Occupancy rates at Humana Hospital Palm Beaches declined as follows: 1983 82.9
1984 76.9
First half of 1985 67.2
Generally, utilization of medical/surgical beds have declined faster than overall hospital bed utilization. For example, occupancy rates at Humana, Jupiter and Martin Memorial have declined as follows:
1983 1984 Semiannual 1984 1985 Semiannual
Jupiter | 71.4 | 67.8 | 58.2 | 59.9 |
Martin | ||||
Memorial | 74.8 | 71.2 | 66 | 68.3 |
Humana | 82.7 | 85.8 | 76.9 | 66.9 |
The low average occupancy rates for District IX do not include over 700 beds in District IX which have been approved but have not yet been licensed (120 of which are at the Wellington facility).
Underlying part of OMHI's need and utilization projections has been the contention that an osteopathic hospital will attract new osteopathic physicians to an area in sufficient numbers to adequately utilize a facility. However, the utilization evidence in this case does not support this "magnet effect". If this magnet effect were a valid principal upon which to base need or utilization projections, one would expect the existing osteopathic facilities in Florida to have attracted sufficient osteopaths to support reasonable utilization of those facilities. The fact of low and falling osteopathic utilization in Florida, rather than supporting such a contention, casts serious doubts on the ability of any osteopathic facility to achieve adequate utilization.
It is probable that utilization will decline somewhat more before the decline bottoms out. It is highly unlikely that utilization will increase in the next five years.
OMHI's ABILITY TO PROVIDE QUALITY CARE.
OMHI and HCA possess the ability to provide quality care at the proposed acute care hospital. Several doctors of osteopathy have expressed an interest in practicing in the area if an osteopathic hospital is located there and others would be attracted. HCA owns approximately 35 hospitals in Florida. It owns or operates 420 hospitals throughout the world. It has assets of 4 billion dollars and has committed the approximately 23 million dollars that will be necessary to construct and begin operation of this facility. It has a one billion dollar line of credit as a part of its general debt capability. It can attract the manpower and other resources necessary to operate OMHI's proposed hospital. The principals of OMHI have the credentials and experience to recruit a qualified staff of osteopathic physicians.
The staffing of the hospital would be accomplished in part by interns who will be a part of the hospital's teaching program. The American Osteopathic Association has no particular staffing requirements for osteopathic teaching facilities. Over the years, it is likely that students who receive internship, externship and residency training at OMHI's proposed hospital will remain in the vicinity.
There is ample medical staff personnel available to support OMHI's proposed hospital.
METHOD OF CONSTRUCTION.
OMHI proved that the cost and methods of construction of the proposed hospital can be expected to be reasonably energy-and-cost-efficient.
I. FINANCIAL FEASIBILITY.
As previously mentioned, HCA has the financial ability to construct and begin operating OMHI's proposed hospital in the short term.
However, OMHI did not prove the long-term financial feasibility of its proposed hospital. The evidence presented by OMHI's experts on the long- term financial feasibility of the proposed hospital were dependent upon the accuracy of the osteopathic bed need projections of Dr. Philip Taylor. As previously discussed, Dr. Taylor's need projections erroneously inflated the osteopathic bed need. For these and other reasons, the testimony of OMHI's financial experts was based upon erroneous assumptions and did not prove long- term financial feasibility.
The Site Of OMHI's Proposed Hospital.
OMHI does not yet know exactly where the proposed location of the hospital is.
Hobe Sound, where the proposed OMHI hospital is to be located, is near the northern border of Jonathan Dickinson State Park. Jonathan Dickinson State Park is a large, unpopulated park area.
There is no evidence that either HCA or OMHI can purchase property in or around Hobe Sound that is appropriate for a proposed hospital for a price at or below 1.5 million dollars.
Zoning Considerations.
To construct an acute care hospital in the vicinity of Hobe Sound, the property must be designated "institutional" under the Martin County Comprehensive Plan.
According to the Zoning Administrator of Martin County, the lands in the vicinity of Hobe Sound that are designated "institutional" are south of Bridge Road along U.S. 1 somewhat adjacent to Jonathan Dickinson State Park. This property was so designated because the Hobe Sound Company, which owns the "institutional" designated lands, wanted to keep residential development off of the property. This would insure that their well fields would not be encroached upon by small subdivisions. No evidence was adduced that any of this property is for sale, could be purchased by HCA within its budget, or is appropriate for a hospital.
The only other "institutional" land near Hobe Sound is owned by Martin County for park sites, fire halls, and uses of that nature.
No applications are pending to designate other lands "institutional" in the Hobe Sound area. The only time such applications can be made is between September 1 and October 31 of each year. The earliest OMHI could apply for such a designation, therefore, is September 1, 1986.
Typically, it would take at least until April, 1987 to approve a change in designation to "institutional." Other building and zoning approvals necessary to construct a hospital would take until approximately the middle of 1987.
OMHI's CON application projects that "continuous" construction would be underway in October, 1986.
According to existing zoning and land use requirements in Martin County, it is likely that construction of the proposed hospital could not begin until at least mid-1987, some nine months behind schedule, assuming necessary approvals are successfully obtained.
If construction of OMHI's proposed hospital was delayed longer than six months, HCA would have to rebudget the project.
Forecasted Utilization.
OMHI's forecasted utilization for its proposed hospital suffers from several flaws.
OMHI's forecasted utilization at its proposed hospital is based upon OMHI's need analysis.
In forecasting 1988 utilization, OMHI did not consider the timing difference between the need projection it issued (July, 1990) and the proposed opening date of the hospital (January, 1988). Because the need for osteopathic beds is less in 1988 than in 1990, basing a utilization forecast on 1990 need would result in an overestimate of patient days.
OMHI assumed an average length of stay of 6.9 days in its bed need calculation, yet the projected average length of stay used by OMHI's financial expert at the proposed hospital is 5.8 days. If the average length of stay in January 1988 is 5.8 days, use of 6.9 will have resulted in an overestimate of need and, thus, an overestimate of utilization.
OMHI projects a first year of occupancy at the proposed hospital of
51.7 percent which is greater than the average experienced in 1984 by all existing Florida osteopathic hospitals. The 15 AOA accredited hospitals in Florida experienced an aggregate acute care occupancy rate of 42.5 percent in 1984. None of those 15 hospitals is a start-up facility like OMHI proposes.
None of the occupancy levels of other existing osteopathic hospitals even approached OMHI's 75 percent estimate of occupancy for the second year at the proposed new hospital.
The aggregate acute care occupancy for all existing District IX hospitals in 1984 was 65.8 percent. Only 3 of 18 existing hospitals experienced occupancies greater than 75 percent in 1984.
There will not be a sufficient number of osteopaths in the Martin-St. Lucie primary service area in 1988 and 1989 to reach OMHI's projected occupancy levels. Even if all the growth in the supply of osteopaths projected for 1988 or 1989 by OMHI for District IX occurred in only Martin and St. Lucie Counties, OMHI's utilization forecast is not supported.
All of this goes to show that OMHI's need analysis was faulty and over-estimated the need for osteopathic beds in District IX, as previously discussed.
Financial Feasibility Of The Proposed Hospital
To evaluate the financial feasibility of OMHI's proposed project, OMHI's expert used a computer model. The computer model used by OMHI's financial expert incorrectly includes all insurance costs, including malpractice insurance costs and liability insurance, rather than just insurance that is rightfully associated with capital costs, to determine capital cost reimbursement by Medicare.
The impact of including all insurance in allowable capital costs depends upon the Medicare payor mix. If that Medicare payor mix is about 60 percent, the impact of including all insurances would erroneously increase the bottom line of OMHI's pro forma.
OMHI's financial expert used three different hospitals in the development of payor mix assumptions: Lawnwood Medical Center, Port St. Lucie Hospital, and Doctors General Hospital in Lake Worth.
In assuming a 55 percent payor mix of Medicare patients, OMHI's financial expert did not know the percent of persons that are 65 and over in either the Hobe Sound area, Martin County, or District IX.
One of the hospitals that OMHI's financial expert considered in assuming a 55 percent Medicare payor mix was Lawnwood, which has an obstetric/gynecology department. OMHI's application does not propose OB/GYN.
Using Lawnwood's experience in determining the payor mix for the proposed hospital without making any adjustment is unreliable because people 65 and over do not use obstetric programs.
Assuming a 55 percent Medicare payor mix for OMHI's proposed hospital was inappropriate. A Medicare payor mix of between 60-65 percent would be more in keeping with the demographics of the Hobe Sound area and Stuart and to the south.
OMHI's financial expert failed to include emergency room physician fees in his analysis even though the proposed hospital will offer a 24 hour a day emergency room. The hospital is unlikely to generate sufficient emergency room revenues in its first 2 years of operation to cover the total expense of having emergency room physicians.
OMHI's assumption of physician fees is understated. Staffing an emergency room with qualified physicians could cost $500,000 a year, $125,000 to
$250,000 of which would have to be subsidized by OMHI.
OMHI's financial expert inappropriately assumed that annual inflation would be 5 percent on both the expense side and the revenue side of his analysis. Rate Controls, a publication relied upon by financial professionals, shows all expense inflation rates above 5 percent.
A higher inflation rate for expenses should have been used by OMHI's financial expert, recognizing the different components of inflation. Very few expense components will experience rates less than 5 percent.
HCA's acquisition costs of the project are not included in the analysis performed by OMHI's financial expert. These costs should have been accounted for under generally accepted accounting principles.
OMHI's financial expert erroneously assumed the same fixed amounts of
$559,000 for deductions from revenue for 1988 and 1989 Medicaid and outpatient Medicare contractual allowances. Using fixed amounts in this manner illustrates a lack of understanding of the reimbursement system or an inability of OMHI's computer model to properly reflect how the system works. To assume these amounts would be fixed is totally erroneous.
The bottom line profitability projected by OMHI's financial experts, approximately $3,000,000 before taxes after the second year, is not believable.
Martin Memorial's financial feasibility expert, Robert Smith, prepared an alternative financial statement which reflects estimates and assumptions that more appropriately reflect the financial outcome of the proposed OMHI hospital in its first 2 years of operation. Mr. Smith's alternative assumptions reflect that the OMHI hospital will lose approximately
$1.8 million dollars in its first year and $1.9 million dollars in its second year.
The break-even analysis performed by OMHI's financial expert is not a valid analysis of the projected break- even point of OMHI's proposed hospital.
OMHI's financial expert assumed in his break-even analysis that many of the projected expenses at the proposed hospital would be 100 percent variable. For example, physician fees and other fees, supply expenses, leases, rentals and repairs. It is inappropriate and erroneous to treat such items as totally variable.
OMHI's financial expert's break-even analysis concludes that that proposed hospital will break-even with an average daily census of 35 or an occupancy of about 29 percent. A hospital, and particularly a 120-bed teaching hospital, is unlikely to break even at an average daily census of 35.
Over a five-year period, using the more reasonable assumptions employed by Martin Memorial's expert, OMHI's hospital is not financially feasible. The hospital probably would lose a significant amount of funds in its fifth year of operation.
IMPACT OF THE OMHI HOSPITAL ON COMPETITION.
OMHI'S original CON application, on page 18, contained a discussion about HCA's impact on the market in the area of its proposed hospital to the north and west through its Lawnwood and Port St. Lucie Hospitals in St. Lucie County and H. H. Raulerson Hospital in Okeechobee County. OMHI stated in that initial application that its application would "bring competition to a health care market now dominated exclusively by Hospital Corporation of America and Martin Memorial Hospital." This discussion was omitted from the application after HCA became involved as a future owner of OMHI.
Approval of the OMHI hospital would give HCA the opportunity to increase its impact on the health care market in and near the Martin-St. Lucie metropolitan statistical area. HCA would own three out of the four hospitals in Martin and St. Lucie Counties. In addition, Raulerson Hospital in Okeechobee County is owned by HCA. (Jupiter is managed by HCA but is not owned by HCA and HCA does not control policy there.)
But approval of the OMHI hospital would not enable HCA to set prices and salaries in the area or take away the charge-paying patients, leaving the nonpaying patients. Only the primary service areas of Martin Memorial and Port St. Lucie overlap with OMHI's proposed service area. Even with OMHI's additional 120 beds, Martin Memorial still would have more beds than OMHI and Port St. Lucie.
The OMHI Hospital would further HCA's advantage over Martin Memorial in the CON process. For example, Lawnwood and Martin Memorial are at present competing for an open-heart and cardiac catherization CON in the same batch. Martin Memorial faces an uphill battle because Lawnwood can draw upon a network of referral base hospitals, such as Port St. Lucie, Raulerson in Okeechobee, and perhaps others to the south.
Given the lack of need for 120 osteopathic beds and the current under-utilization of allopathic hospitals in District IX, it should not be expected that OMHI's additional competition will promote quality assurance or cost effectiveness. To the contrary, the additional hospital services probably would result in duplication of services, higher costs and economic pressures to sacrifice quality assurance for cost considerations.
MORE COST-EFFECTIVE ALTERNATIVES.
HCA owns the Port St. Lucie, Lawnwood Memorial and H. H. Raulerson hospitals. Virtually no osteopaths practice at any of them. If HCA would operate those hospitals as Humana Hospital Palm Beaches is operated, the future need for osteopathic services and hospitals and internship and residency programs in District IX could be met more efficiently and at a lower cost. OMHI did not prove that it explored those alternatives and found them not to be practicable.
There are now approximately 15 osteopathic hospitals in Florida, but only eight have internship or residency programs. If such teaching programs could be established at those hospitals, any additional need for them in Florida could be met in a more efficient and less costly manner than by building a hospital that is not otherwise needed. OMHI did not prove that it has explored those alternatives and found them not to be practicable.
IMPACT OF THE PROPOSED HOSPITAL ON MARTIN MEMORIAL, JUPITER, AND NME.
If the proposed hospital succeeds and fills with patients, it will negatively impact both Martin Memorial and Jupiter Hospitals. It would introduce another 120 beds, which are not physically any different from available beds.
Jupiter Hospital has received 15 percent of its patients from the Hobe Sound area for the last few years. Jupiter Hospital is a fifteen minute drive from Hobe Sound.
The OMHI hospital would have a substantial effect on Jupiter's market in the Hobe Sound area. It would impact substantially on Jupiter's financial viability.
The OMHI hospital could result in Jupiter Hospital eliminating some services that it now makes available to the community.
The OMHI hospital would probably result in another reduction of staff at Jupiter.
The OMHI hospital probably would cause an increase in patient charges at Jupiter Hospital.
National Medical Enterprises, Inc., d/b/a West Boca Raton Medical Center (NME), applied for a certificate of need to add 15 allopathic obstetrical beds at its hospital. The NME application was reviewed in the same batching cycle as the OMHI application. Approval of the OMHI application would decrease the net need for acute-care allopathic beds under Rule 10-5.11(23), Florida Administrative Code, and substantially impact NME's application.
CONCLUSIONS OF LAW
General Governing Law.
Certificate of need applications are reviewed under Section 381.494, Florida Statutes (1985). Most applications are reviewed only under the criteria of Section 381.494 (6)(c). But since the pending application of Petitioner, Osteopathic Medical Hospitals, Inc. (OMHI), is for a certificate of need for an osteopathic hospital, it enjoys the advantages of Section 381.494(2).
Section 381.494(2), Florida Statutes (1985), provides: when an application is made for a
certificate of need to construct
or to expand an osteopathic acute care hospital, the need for such hospital shall be determined on the
basis of the need for and availability of osteopathic services and osteopathic acute care hospitals in the district.
In this case, OMHI seeks to demonstrate the need for its proposed osteopathic hospital only on "the need for and availability of osteopathic services and osteopathic acute care hospitals in the district." It does not seek to demonstrate, and the Findings Of Fact show that the evidence does not demonstrate, the need for its proposed osteopathic hospital in part to meet any general acute care hospital bed need. Accordingly, the need for and availability of allopathic services and allopathic acute care hospitals have not been made relevant to this proceeding. Neither is the Rule 10-5.11(23), Florida Administrative Code, methodology for determining general acute care bed need relevant to this proceeding.
Having chosen to proceed exclusively under Section 381.494(2), OMHI must accept the entirety of that provision with both its advantages and disadvantages.
The predecessor statute to Section 381.494(2) provided that the "need for [an osteopathic facility shall be determined on the basis of the need and availability in the community for osteopathic services and facilities." (Emphasis added.) Section 381.494(2), Florida Statutes (Supp. 1984). Under that statute, the inaccessibility of osteopathic services for a remote part of District IX might demonstrate a need for an osteopathic facility in that "community." But Section 381.494(2) now provides that "the need for such hospital shall be determined on the basis of the need for and availability of osteopathic services and osteopathic acute care hospitals in the district." (Emphasis added.) Section 381.494(2), Florida Statutes (1985). The current law is applicable to these proceedings. See Bruner v. Board of Real Estate, 399 So.2d 4 (Fla. 1st DCA 1981). Under the current law, inaccessibility of part of a health planning district to an osteopathic hospital or osteopathic services does not establish a need for additional services if there are enough services available in the district as a whole.
Even if inaccessibility of osteopathic services in a remote corner of District IX could support the need for additional osteopathic services, there was insufficient evidence to establish the "inaccessibility" of such services from a health planning viewpoint. The only evidence on the subject involved 30- minute drive times from the Wellington hospital. While parts of District IX are outside the 30-minute drive time, there was no evidence to prove that a 30- minute or any other particular drive time is an appropriate accessibility standard for osteopathic services. Rule 1O-5.11(23)(i) establishes a 30-minute drive time standard for urban areas for accessibility to general acute care
hospitals. But osteopaths serve only approximately ten percent of the population, and there is no evidence to prove that the Rule 10-5.11(23)(i) accessibility standards should apply when determining osteopathic need. Nor is there evidence that there are no osteopathic facilities in adjoining districts that would be accessible to the remote areas of District IX. Inventory of Osteopathic Beds.
The decision in Gulf Coast Hospital, Inc. vs. Department of Health and Rehabilitative Services, 424 So.2d 86 (Fla. 1st DCA 1982), is the landmark appellate decision construing the predecessor statute to Section 381.494(2). Since Gulf Coast construes a state statute, it continues to be viable notwithstanding the later decision in Farmworker Rights Organization vs. Department of Health and Rehabilitative Services, 430 So.2d 1 (Fla. 1st DCA 1983). The Farmworker decision dealt with an administrative rule which was inconsistent with a federal statute. It does not address the situation where a state statute arguably conflicts with a federal statute. Cf. Section 381.494(8)(a), Florida Statutes (1985). In such circumstances, it seems clear that the Florida statute establishing the Florida certificate of need program must control over a federal certificate of need statute.
Under the Gulf Coast rationale, it is concluded that the Humana Hospital Palm Beaches should be considered an "osteopathic acute care hospital" on the facts of this case. The Gulf Coast decision states:
Osteopathic facilities may not differ significantly as to physical plant and equipment but are highly distinctive because of the purpose for which they are constructed and maintained. That purpose includes the care and treatment and care of patients in accordance with
the principles of osteopathy, the teaching and study of osteopathic medicine, and
the association in practice of doctors of osteopathy, including osteopathic specialists with support from staff personnel suitably trained in the principles and philosophy of osteopathy. The management and control of the facility so as to actively further
all of the above activities rather than to merely tolerate them, must be in the hands of osteopaths or those
sympathetic to that school of medicine.
Id. at 90. The evidence in this case is that the Humana Hospital does more than merely "tolerate" the presence of osteopaths on its staff. Notwithstanding that its present policies came into being as part of the settlement of litigation between osteopaths and allopaths, those policies make the Humana Hospital an osteopathic hospital.
In addition, as referenced in the Gulf Coast decision, "an osteopathic residency and internship program authorized by Sections 459.005 and 459.021, Florida Statutes, is required to be carried out in `osteopathic hospitals'." Id. at 88. Since the Humana Hospital is AOA accredited and has an internship program, it follows that the Humana Hospital is an "osteopathic hospital" under Gulf Coast's interpretation of Section 381.494(2).
Finally, Gulf Coast also addresses the question "whether something less than an entire or separate hospital would also constitute an "osteopathic facility." Id. Gulf Coast answers the question:
Presumably some portion of an existing facility devoted to the practice of osteopathy would come within the statutory definition and would be a factor in determining need for expansion or construction of other osteopathic facilities in the area.
Id. For all these reasons, it must be concluded that the Humana Hospital is an "osteopathic hospital" under Section 381.494(2).
Although the Humana Hospital is an "osteopathic hospital," allopathic practice at the hospital uses about half of its capacity. Since OMHI bases the need for its proposed osteopathic hospital exclusively on osteopathic need, it is only appropriate to consider half of the Humana bed complement, or 81 beds, as "available" under Section 381.494(2). In other words, only 81 of the Humana Hospital beds should be considered to be part of the "inventory" of available osteopathic beds in District IX.
Even if the Humana Hospital were not an "osteopathic acute care hospital," half or 81 of its beds should be considered part of the "availability of osteopathic services" under Section 381.494(2). Those beds must be considered among the available osteopathic beds for purposes of determining need for osteopathic beds in District IX. Planning Horizon.
The next legal question to be resolved before proceeding with an analysis of the need for OMHI's proposed hospital on the evidence in this case is the question how far into the future bed need should be projected. The testimony of health planning experts is that it would be appropriate for health planning purposes to determine the need for OMHI's proposed hospital upon the osteopathic bed need projected five years from the date of the final hearing. The evidence also is that Respondent, Department of Health and Rehabilitative Services (DHRS), has in the past followed a non-rule policy of projecting need for all acute care hospitals, allopathic and osteopathic, five years into the future from the date of the final formal administrative hearing, if any. However, that was before the decision in Gulf Court Nursing Center vs. Department of Health and Rehabilitative Services, 10 FLW 1983 (Fla 1st DCA 1985), rehearing denied, Slip Opinion, filed February 14, 1986, Case No. AY-469.
The Gulf Court decision held that, on the facts of that case, DHRS should not have settled with a prior batched applicant for nursing home beds by awarding to the applicant beds which were not identified by the district and state health plans at the time the prior batched application was complete unless the prior batched applicant properly updated or resubmitted its application for comparative review with later batched applicants. while the Gulf Court decision spoke primarily in terms of the "fixed pool of beds" identified in the district and state health plans, it as easily could have referred to the planning horizons which operated to "fix" those pools of beds. Under the facts of Gulf Court, the planning horizon for purposes of determining projected bed need was
fixed when the application was deemed complete. An applicant in circumstances fitting the factual circumstances of Gulf Court could only extend the planning horizon by updating or resubmitting its application in accordance with Rule 10- 5.14, Florida Administrative Code.
For several reasons, it is concluded that the Gulf Court decision should not apply in this case. First, on the evidence of this case, there is not and never has been any district or state health plan identifying projected osteopathic bed need. Second, on the evidence of this case, there is not and never has been any DHRS rule methodology for determining projected osteopathic bed need. For those two reasons, there is not and never has been any "fixed pool" of osteopathic beds. Absent a "fixed pool of osteopathic beds," OMHI's application was never tied to or restricted to bed need projected on a particular planning horizon. The record in this case clearly demonstrates all the parties were aware that OHMI was seeking to establish need on the basis of a five year planning horizon running from the date of the final hearing. Third, and lastly, unlike the situation in Gulf Court, there is no later batched applicant complaining in this case that OHMI's application must be determined upon need projected for an earlier planning horizon or that its application should be compared with OHMI's. This is one of the bases on which the Gulf Court panel on rehearing distinguished Gulf Court from its decision in Community Psychiatric Centers, Inc. vs. Department of Health and Rehabilitative Services, 474 So.2d 870 (Fla. 1st DCA 1985).
These three points of distinction between this case and the Gulf Court case must be considered in light of the clarification on rehearing in Gulf Court:
Our decision is based on the federal and state statutes and rules in existence at the time the HRS order was entered. The decision concludes that such statutory language gave Gulf Court the right to a comparative hearing under the circumstances shown in this case. The opinion should
be read in this light, and the legal consequences of the decision should not be extended beyond the issues actually decided.
Substantial changes have been made to the cited Florida Statutes in rules since 1982. The applicability of the changed statutes, and how the rationale of this decision must be applied in light of these statutory changes, are open questions.
Although the Gulf Court decision is not clear whether it should apply to this case to fix the planning horizon at five years after OMHI's application was deemed complete, it is concluded that the Gulf Court decision does not lead to such a result. To the contrary, the need for OMHI's proposed project should be determined based upon the need projected on a five year horizon from the date of final hearing or, most nearly, January 1, 1991.
F. Osteopathic Bed Need.
Even using a January 1, 1991 planning horizon, projected osteopathic bed need does not demonstrate a need for OMHI's proposed 120 bed osteopathic hospital. On the evidence presented in this case, a gross district-wide need of only 180 osteopathic beds is projected for January 1, 1991. Even in peak seasons, only 122 percent or 220 beds will be needed on January 1, 1991. There are already 201 osteopathic beds in the inventory. Section 381.494(6)(c)1.
Section 381.494(6)(c)1., Florida Statutes (1985), provides as one of the criteria for review of certificate of need applications:
"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."
As referenced in the Findings of Fact, there is no district or state health plan which specifically addresses the need for osteopathic hospitals or services in District IX. Both the district and state health plans do, however, express concern for under-utilization and low occupancy rates in acute care general hospitals throughout the state and in District IX in particular. That aspect of the applicable state and district health plans also would tend to favor denial of OMHI's application since overall acute care general hospital occupancy rates are well below 80 percent (64.7 percent for the first half of 1985) and osteopathic acute care general hospital occupancy rates are much lower still (39.9 percent for the full year ending June 30, 1985).
Section 381.494(6)(c)2.
Section 381.494(6)(c)2., Florida Statutes (1985), provides as one of the criteria for the review of certificate of need applications:
"The availability, quality of care, efficiency, appropriateness, accessi- bility, extent of utilization, and adequacy of like and existing health care services and hospices in the service district of the applicant."
For purposes of OMHI's application, the only like and existing health care services in District IX are the Humana Hospital Palm Beaches and the Wellington Hospital under construction. The 81 beds at the Humana Hospitals utilized for osteopathic admissions were approximately 67.2 percent occupied during the first half of 1985. Since it still is under construction, the Wellington hospital has not yet been utilized at all. There was no evidence that either of those two facilities are unavailable, lacking in quality of care, lacking in efficiency (other than their extent of utilization) inappropriate or inadequate. As previously discussed, there is no evidence to prove that those facilities are "inaccessible' from a health planning standpoint. Nor was there proof how accessible OMHI's proposed hospital would be to the most northern parts of District IX or that there are no osteopathic services in the adjoining district that would be more accessible to the most northern part of District IX.
Section 381.494(6)(c)3.
Section 383.494(6)(c)3., Florida Statutes (1985), provides as one of the criteria for review of certificate of need applications: "The ability of the applicant to provide quality of care."
The evidence was sufficient to prove that OMHI will be able to provide quality care.
Section 381.494(6)(c)4.
Section 381.494(6)(c)4., Florida Statutes (1985), provides as one of the criteria for review of certificate of need applications:
"The availability and adequacy of other health care facilities and services and hospices in the service district of the applicant, such as outpatient care and ambulatory or home care services, which may serve as alternatives for the health care facilities and services to be provided by the applicant."
There are no alternatives to the health care facilities and services to be provided by OMHI. OMHI seeks only to meet the need for osteopathic hospital beds. Alternatives such as outpatient care and ambulatory home care services do not meet that need; nor do allopathic hospitals. Section 381.494(6)(c)5.
Section 381.494(6)(c)5., Florida Statutes (1985), provides as one of the criteria for review of certificate of need applications:
"Probable economies and improvements in service that may be derived from operation of joint, cooperative, or shared health care resources."
There was no evidence to prove that OMHI's proposed osteopathic hospital will result in economies or improvements derived from operation of joint, cooperative or shared health care resources. Section 381.494(6)(c)6.
Section 381.494(6)(c)6., Florida Statutes (1985), provides as one of the criteria for review of certificate of need applications:
"The need in the service district of the applicant for special equipment and services which are not reasonably and economically accessible in adjoining areas."
There was no evidence to prove that OMHI's application will fill a need for special equipment and services not accessible in adjoining service districts. Section 381.494(6)(c)7.
Section 381.494(6)(c)6., Florida Statutes (1985), provides as one of the criteria for review of certificate of need applications:
"The need for research and educational facilities, including, but not limited to, institutional training programs and community training programs for health care practitioners and for doctors of osteopathy and medicine
at the student, internship, and residency training levels."
The evidence did prove that there is a need for additional educational osteopathic internship and residency programs in the state. OMHI's proposed hospital probably would help meet those needs. However, there was insufficient evidence to prove that there is a particular need for additional osteopathic internship and residency programs in District IX. In addition, the evidence was that it would be less costly and more efficient for internship and residency programs to be instituted in the seven of fifteen existing osteopathic hospitals in Florida which do not currently have such programs. Likewise, it would be less costly and more efficient for one or more of the HCA owned and operated hospitals in District IX and in the State to operate like the Humana Hospital Palm Beaches and obtain the necessary accreditation to offer such programs. Finally, there is the possibility that an additional osteopathic hospital with internship and residency programs would drive down osteopathic utilization in District IX even further, jeopardizing the existing internship program at Humana and the planned programs at Wellington, as well as the OMHI program itself. Section 381.494(6)(c)8.
Section 381.494(6)(c)8., Florida Statutes (1985), provides as one of the criteria for review of certificate of need applications:
"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; the extent to which
the services will be accessible to schools for health professions in the service district 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."
The evidence was sufficient to prove that OMHI will have available to it sufficient resources of the kind referred to in Section 381.494(6)(c)8., to accomplish and operate its proposed osteopathic hospital.
There was no evidence on the effect OMHI's proposed hospital will have on clinical needs of health professional training programs in the service district other than the osteopathic internship and residency programs already referred to.
Likewise, there was no evidence on the extent to which the proposed services will be accessible to schools for health professions in the service district for training programs except in connection with osteopathic internship and residency programs.
There was no evidence on the availability of alternative uses of the OMHI resources for the provision of other health services.
Finally, the evidence was not clear whether OMHI's proposed hospital would be geographically accessible to all residents of the service district in that no geographical accessibility standard was proved. OMHI proposes that 2.5 percent of the patients at its proposed osteopathic hospital will be Medicaid patients. Section 381.494(6)(c)9.
Section 381.494(6)(c)9., Florida Statutes (1985), provides as one of the criteria for review of certificate of need applications:
"The immediate and long-term financial feasibility of the proposal."
HCA can provide OMHI with the capital needed to ensure the immediate financial feasibility of the proposal. Given the lack of need for 120 additional osteopathic hospital beds on the January 1, 1991 planning horizon, the long-term financial feasibility of OMHI's proposed hospital was not proved. To some extent, the long-term financial feasibility of OMHI's proposal would depend upon allopathic utilization of the hospital. There was insufficient proof of the extent to which allopathic need in District IX will contribute to the utilization of OMHI's proposed hospital, raising additional questions as to its long-term financial feasibility. In any event, in weighing the criteria as required by the decision in Department of Health and Rehabilitative Services vs. Johnson and Johnson, 447 So.2d 361 (Fla. 1st DCA 1984), even a financially feasible project should not be certificated if there is no demonstrated need for it. (Section 381.494(6)(c)10., Florida Statutes (1985), does not apply.)
Section 381.494(6)(c)11.
Section 381.494(6)(c)11., Florida Statutes (1985), provides as one of the criteria for review of certificate of need applications:
"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 service district in which the entities are located or in adjacent service districts. 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."
There was no proof that OMHI's proposed project will render substantial services outside District IX except to the extent that its internship and residency programs will (as previously discussed). Section 381.494(6)(c)12.
Section 381.494(6)(c)12., Florida Statutes (1985), provides as one of the criteria for review of certificate of need applications:
"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 improve- ments or innovations in the financing and delivery of health services which foster competition and service to promote quality assurance and cost- effectiveness."
OMHI's proposed project would increase the number of osteopaths in District IX since some new osteopaths can be expected to move to the area of a new osteopathic hospital. This will increase the competition between osteopaths and allopaths, just as OMHI's proposed hospital will compete to some extent with other area allopathic hospitals. However, given the current under-utilization of hospitals in District IX, both allopathic and osteopathic, it should not be expected that the additional competition for general acute care hospital services will promote quality assurance or cost-effectiveness. To the contrary, the additional hospital services should be expected to result in duplication of hospital services, higher costs and economic pressures to sacrifice quality assurance for cost considerations. Section 381.494(6)(c)13.
Section 381.494(6)(c)13., Florida Statutes (1985), provides as one of the criteria for review of certificate of need applications:
The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction.
OMHI adequately proved that the costs and methods of its proposed construction are reasonably energy and cost efficient and effective. Section 381.494(6)(d).
Section 381.494(6)(d), Florida Statutes (1985), provides as one of the criteria for review of certificate of need applications:
"In cases of capital expenditure proposals for the provision of new health services to inpatients, the department shall also reference each of the following in its findings of fact:
That less costly, most efficient, or more appropriate alternatives to such
impatient services are not available
and the development of such alternatives has been studied and found not practicable.
That existing impatient facilities providing impatient services similar to those proposed are being used in an appropriate and efficient manner.
In the case of new construction, that alternatives to new construction, for example, modernization or sharing arrangements, have been considered and have been implemented to the maximum extent practicable.
That patients will experience serious problems in obtaining inpatient care of the type proposed, in the absence of the proposed new service.
In the case of a proposal for the addition of beds for the provision of skilled nursing or intermediate care services, that the addition will be consistent with the plans of other agencies of the state responsible for the provision and financing of long-
term care, including home health services.
The Findings Of Fact in this case reflect that the findings referenced in the applicable parts of Section 381.494(d) have not been made in this case. This is primarily because OMHI has not proved that it has studied and found not practicable the alternative of one or more of the existing HCA owned and operated hospitals in District IX and elsewhere in Florida operating in a manner similar to the Humana Hospital Palm Beaches. Such alternatives would appear to be less costly and more efficient means of meeting the limited osteopathic bed need expected on the January 1, 1991, planning horizon and meeting the need for osteopathic internship and residency programs in the State of Florida. Similarly, OMHI has not explored and found not practicable the less costly and more efficient alternative for filling the need for osteopathic internship and residency programs of establishing them at some of the seven of fifteen existing osteopathic hospitals in Florida which do not now operate such programs. Balanced Consideration Of The Criteria.
As previously mentioned, the decision in Johnson and Johnson, supra, requires "a balanced consideration of all the statutory criteria." Id. at 363. Cf. also Humana, Inc., et al. vs. Department of Health and Rehabilitative Services, 469 So.2d 889, 891 (Fla. 1st DCA 1985). The appropriate weight afforded to each criterion is not fixed, but varies on a case by case basis. Cf. Collier Medical Center, Inc. vs. Dept. of Health and Rehabilitative Services, 462 So.2d 83, 84 (Fla. 1st DCA 1985).
As previously discussed, OMHI's proposed osteopathic hospital would be unfavorably viewed under many of the criteria and favorably viewed under some of them. Giving due consideration to both the importance and number of criteria under which OMHI's application would be unfavorably viewed, it must be concluded that OMHI's application should be denied. In addition, it was not possible on the evidence of this case to include findings of fact of the kind required under Section 381.494(6)(d).
Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that Respondent, Department of Health and Rehabilitative Services, deny the application of Osteopathic Medical Hospitals, Inc., for a Certificate of Need for an osteopathic hospital in Martin County, CON Action No. 2842.
RECOMMENDED this 8th day of April, 1986, in Tallahassee, Florida.
J. LAWRENCE JOHNSTON 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 8th day of April, 1986.
ENDNOTE
1/ Despite the decisions in Gulf Court Nursing Center vs. Department of Health and Rehabilitative Services, 10 FLW 1983 (Fla. 1st DCA August 20, 1985),
clarified on rehearing, 11 FLW 437 (February 14, 1986) and NME Hospitals, Inc., etc. et al. vs. Department of Health and Rehabilitative Services, 10 FLW 1976 (August 20, 1985), reversed on rehearing, 11 FLW 641 (March 13, 1986), OMHI confirmed at a motion hearing on March 26, 1986, that it still does not seek to meet any of the general acute care bed need under Rule 10-5.11(23), Florida Administrative Code, and urged the Hearing Officer to proceed with submission of a Recommended Order. For this reason, and because of the outcome of this Recommended Order, there is no impediment to entry of this Recommended Order at this time. The only parties who opposed entry of a Recommended Order in Case No. 84-0743 at the March 26 hearing NME and Humana cannot be harmed by any possible procedural error resulting from the entry of this Recommended Order.
APPENDIX TO RECOMMENDED ORDER CASE NO. 84-0743
Rulings on 0MHIs Proposed Findings of Fact
Covered by Finding 1.
Covered by Finding 4.
Rejected as subordinate and unnecessary.
Covered by Finding 5.
Covered by Finding 5.
Covered by Finding 6.
Rejected as subordinate and unnecesssary.
Covered in part by Finding 6. Otherwise rejected as conclusion of law and unnecessary.
Rejected in part as conclusion of law and in part as subordinate and unnecessary.
Covered by Finding 7.
Covered by Finding 8.
Covered by Finding 9, except the last sentence is rejected as subordinate.
Covered by Finding 10.
Covered by Finding 11.
Covered by Finding 12.
Covered by Finding 13.
Rejected as conclusion of law.
Covered in part by Finding 16. Otherwise rejected in part as conclusion of law and in part as subordinate.
Covered by Finding 17.
Covered by Finding 18.
Covered in part by Finding 19. Otherwise rejected as unnecessary.
Rejected as subordinate and unnecessary.
Covered by Finding 20.
Covered in part by Finding 20. Otherwise rejected as subordinate and unnecessary.
Rejected as irrelevant and unnecessary.
Rejected as unnecessary.
Covered by Finding 21.
Covered by Finding 22.
Covered in part by Finding 23. Otherwise rejected as subordinate and unnecessary.
Rejected as cumulative and unnecessary.
Covered in part by Finding 24. Otherwise rejected as subordinate and unnecessary.
Rejected as cumulative and unnecessary.
Covered in part by Finding 25. Otherwise rejected as subordinate and unnecessary.
Covered in part by Finding 26. Otherwise rejected as contrary to the evidence.
Covered by Finding 27.
Rejected as subordinate, argumentative and unnecessary.
Covered in part by Finding 28. Otherwise rejected as contrary to the greater weight of the evidence.
Rejected as unnecessary.
Rejected as subordinate and unnecessary.
Rejected as subordinate and unnecessary.
Rejected in part as cumulative and in part as conclusion of law.
Rejected as conclusion of law.
Rejected as conclusion of law.
Rejected in part as conclusion of law and in part as irrelevant and unnecessary.
Rejected in part as conclusion of law and in part as subordinate, irrelevant and unnecessary.
57-64. Rejected as subordinate, irrelevant and unnecessary. See Finding
29.
Rejected as conclusion of law.
Covered by Finding 30.
Covered by Finding 31.
Covered by Finding 32.
Covered in part by Finding 36. Otherwise rejected as contrary to the
greater weight of the evidence.
Rejected as cumulative.
Rejected as cumulative and conclusion of law.
Rejected as argumentative, irrelevant and unnecessary.
Rejected in part as conclusion of law, in part as cumulative and in part as irrelevant and unnecessary.
Rejected in part as argumentative in part as conclusion of law, and in part being contrary to the greater weight of the evidence.
Rejected in part as conclusion of law and in part as subordinate, irrelevant and unnecessary.
Rejected as subordinate, irrelevant and unnecessary, except as covered by Finding 43.
Rejected as contrary to the greater weight of the evidence. See Finding 37 through 52. 78. Rejected as contrary to the greater weight of the evidence. See Finding 49.
Rejected as contrary to the greater weight of the evidence. See Findings 37 through 52.
Covered in part by Finding 51. Otherwise rejected as contrary to the greater weight of the evidence. See Findings 37 through 52.
Covered in part by Finding 51 and 42. Otherwise rejected as contrary to the greater weight of the evidence.
Rejected in part as argumentative and in part as contrary to the greater weight of the evidence. See Findings 37 through 52.
Rejected as subordinate.
Rejected in part as irrelevant and in part as contrary to the greater weight of the evidence. See Findings 37 through 52.
85-93. Rejected as subordinate and unnecessary.
Rejected as contrary to the greater weight of the evidence. See Findings 53 through 75.
Rejected as subordinate and unnecessary.
Rejected as contrary to the greater weight of the evidence. See Findings 53 through 75.
Rejected in part as argumentative, subordinate and unnecessary, and in part, as contrary to the greater weight of the evidence. See Findings 53 through 75.
Rejected as argumentative, subordinate and unnecessary.
Rejected as contrary to the greater weight of the evidence. See Findings 53 through 75.
Rejected as contrary to the greater weight of the evidence. See Findings 53 through 75.
Rejected in part as argumentative and in part as contrary to the greater weight of the evidence. See Findings 53 through 75.
Rejected as subordinate and unnecessary.
Rejected as cumulative, subordinate and unnecessary.
Rejected in part as irrelevant and covered in part by Finding 75.
Rejected as irrelevant and unnecessary.
In part, rejected as irrelevant and unnecessary and in part, covered by Findings 76 through 78.
Rejected as contrary to the greater weight of the evidence. See Findings 53 through 75.
Rejected in part as subordinate, in part as unnecessary, and in part as contrary to the greater weight of the evidence. See Findings 53 through 75.
Rejected as subordinate.
Rejected as subordinate.
Rejected in part as conclusion of law, in part as subordinate, and in part as cumulative.
Rejected in part as conclusion of law, in part as irrelevant and in part as contrary to the greater weight of the evidence. See Findings 37 through
Covered in part by Finding 75.
Rejected as contrary to the greater weight of the evidence. See Findings 53 through 75.
Rejected as subordinate and unnecessary.
Rejected as argumentative and contrary to the greater weight of the evidence. See Findings 86 through 95.
116-125. Rejected in part as argumentative, in part as subordinate, and in part as unnecessary. Also contrary to the greater weight of the evidence, see Findings 86 through 95.
Rejected in part as conclusion of law and in whole as unnecessary.
Rejected in part as conclusion of law, in part as subordinate and unnecessary, in part as cumulative, and in part, as irrelevant. See also Findings 82 through 85.
Rejected in part as conclusion of law and in part as contrary to the greater weight of the evidence. See Findings 37 through 52.
Rejected as irrelevant to osteopathic bed need, the only bed need made relevant by OMHI.
Rejected in part as cumulative and in part as contrary to the greater weight of the evidence. See Findings 86 through 95.
Rejected in part as conclusion of law and in part as contrary to the greater weight of the evidence. See Findings 145 and 146.
Covered in part by, and rejected in part as contrary to, Findings 145 and 146.
Rejected as contrary to the greater weight of the evidence. See Findings 53 through 75 and 145 through 146.
Covered by Findings 96 through 98.
Covered by Findings 96 through 98.
Covered by Findings 96 through 98.
Rejected as contrary to the greater weight of the evidence. See Findings 102 through 104.
Covered by Findings 99 and 100.
Rejected as cumulative.
Covered by Finding 100.
Rejected as subordinate and contrary to the greater weight of the evidence. See Findings 101 through 139.
Rejected as subordinate and unnecessary.
Rejected as subordinate and contrary to the greater weight of the evidence. See Findings 101 through 139.
Rejected as subordinate and contrary to the greater weight of the evidence. See Findings 101 through 139.
Rejected as subordinate and contrary to the greater weight of the evidence. See Findings 101 through 139.
Rejected as subordinate and contrary to the greater weight of the evidence. See Findings 101 through 139.
Covered by Finding 85.
Rejected as subordinate and contrary to the greater weight of the evidence.
Rejected as subordinate and contrary to the greater weight of the evidence.
Rejected as conclusion of law.
Covered by and subordinate to Finding 99.
Covered by and subordinate to Finding 99. 153-156. Covered by Findings 140 through 144.
Rejected as cumulative.
In part, covered by and in part rejected as contrary to Findings 79 through 81 and 146.
In part, covered by and in part rejected as contrary to Findings 79 through 81 and 146.
Rejected as cumulative.
Rejected in part as cumulative and in part as subordinate.
162-169. Rejected as subordinate and unnecessary. Also rejected because the evidence as a whole is not persuasive that there is a shortage of general practitioners in the area that would justify granting of the OMHI application.
Rulings on Proposed Findings of Martin Memorial and DHRS.
Covered by Finding 2.
Covered to the extent necessary in Finding 3.
Covered by Finding 4.
Rejected as unnecessary.
Rejected as subordinate, irrelevant and unnecessary.
Rejected as subordinate, irrelevant and unnecessary.
Rejected as unnecessary.
Rejected as subordinate and unnecessary.
Covered by Finding 140.
Covered by Finding 4.
Covered by Finding 5.
Rejected as subordinate and unnecessary.
Rejected as subordinate and unnecessary.
Covered by Finding 5.
Covered by Finding 4.
Rejected as subordinate and unnecessary.
Covered by Finding 6.
Rejected as cumulative.
Rejected as subordinate and unnecessary.
Rejected as unnecessary. Departures from representations in the application would subject OMHI to enforcement proceedings.
Rejected as unnecessary. Departures from representations in the application would subject OMHI to enforcement proceedings.
Rejected as irrelevant and unnecessary.
Covered by Finding 140 and 145.
To the extent necessary, covered by Finding 14 and 142.
Rejected as unnecessary.
To the extent necessary, covered by Findings 140 and 141.
To the extent necessary, covered by Findings 140 and 141.
To the extent necessary, covered by Findings 140 and 141.
To the extent necessary, covered by Findings 140 and 141.
To the extent necessary, covered by Findings 140 and 141.
Covered by Finding 140.
Covered by Paragraph 141.
Rejected as contrary to Finding 142.
Covered by Finding 143.
Rejected as unnecessary.
36-46. Covered to the extent necessary by Findings 86 through 95.
Covered by Finding 147.
Covered by Finding 148.
Covered by Finding 149.
Covered by Finding 150.
Covered by Finding 151.
Covered by Finding 152.
53-64. Covered by Findings 82 through 84.
Subordinate to Finding 102.
Covered by Finding 103.
67-73. Rejected as subordinate and unnecessary.
Covered by Finding 104.
Rejected as subordinate and unnecessary.
Covered by Finding 105.
Covered by Finding 106.
Covered by Finding 107.
Covered by Finding 108.
Covered by Finding 109.
Covered by Finding 110.
Covered by Finding 111.
Covered by Finding 112.
84-86. Covered by the absence of any finding of a shortage of general or family practitioners that would justify granting the OMHI application.
87. Rejected as subordinate and unnecessary. 88-90. Subordinate to Finding 53(c).
91. Unnecessary.
92-104. Covered in part by and rejected in part as contrary to Findings 14 through 28.
105-130. In part, covered to the extent necessary and in part rejected as contrary to Findings 53 through 75.
Rejected in part as unnecessary and covered in part by Finding 37.
Covered by Finding 38.
Covered by Finding 39.
Covered by Finding 40.
Covered by Finding 41.
Rejected in part as conclusion of law and in part as subordinate and unnecessary.
Covered by Finding 42.
Covered by Finding 43.
Covered by Finding 44.
Covered by Finding 45.
Covered by Finding 46.
Rejected as irrelevant and unnecessary.
Covered by Finding 47.
Rejected in part as subordinate, in part as cumulative, and in part as irrelevant.
Rejected as conclusion of law.
146-156. In part, covered to the extent necessary and not subordinate, and in part, rejected as contrary to Findings 53 through 75.
Covered by Finding 113.
Covered by Finding 114.
Subordinate and unnecessary.
Covered by Finding 115.
Covered by Finding 116.
Covered by Finding 117.
Covered by Finding 118.
Covered by Finding 119.
Covered by Finding 120.
Rejected as subordinate and unnecessary.
Rejected as subordinate and unnecessary.
Rejected as subordinate and unnecessary.
Rejected as subordinate and unnecessary.
Rejected as cumulative.
In part, rejected as subordinate and unnecessary, and in part, covered by Findings 30 through 36. In part, rejected as contrary to Findings 53 through 75.
Rejected as conclusion of law. In part, rejected as contrary to Findings 53 through 75.
Covered by Findings 30 through 36. In part, rejected as contrary to Findings 53 through 75.
174-177. Rejected as subordinate and unnecessary. In part, rejected as contrary to Findings 53 through 75.
178. In part, covered by Findings 76 through 78, and in part, rejected as subordinate and unnecessary. In part, rejected as contrary to Findings 53 through 75.
179-180. Rejected as subordinate and unnecessary. In part, rejected as contrary to Findings 53 through 75.
In part, covered by Findings 76 through 78, and in part, rejected as subordinate and unnecessary. In part, rejected as contrary to Findings 53 through 75.
Covered by Findings 80, 81, 145 and 146.
Covered by Findings 80, 81, 145 and 146.
Covered by the absence of any Finding that the proposed facility would be a research facility.
In part, covered by Finding 85 and in part, rejected as unnecessary.
Covered by Findings 86 through 95 and 113 through 121.
Rejected as unnecessary.
Rejected because utilization of allopathic facilities is not relevant to determination of the need for OMHI proposal.
Rejected as subordinate.
190-191. Covered by Findings 102 through 112.
Covered by Finding 112.
Rejected as subordinate and unnecessary.
Rejected as contrary to the greater weight of the evidence.
Covered by Finding 122.
196-210. Rejected as subordinate and unnecessary.
Covered by Finding 122.
Covered by Finding 123.
Rejected as subordinate and unnecessary.
Covered by Finding 124.
Covered by Finding 125.
Covered by Finding 126.
217-218. Covered by Finding 127.
219-221. Rejected as subordinate and unnecessary.
Covered by Finding 128.
Covered by Finding 129.
Covered by Finding 130.
Covered by Finding 131.
Rejected as unnecessary.
Covered by Finding 132.
Covered by Finding 134.
Covered by Finding 133.
230-231. Rejected as subordinate and unnecessary.
232. Covered by Finding 101.
233-234. Covered by Finding 135.
Rejected as cumulative and unnecessary.
Rejected as subordinate and unnecessary.
Covered by Finding 136.
Covered by Finding 137.
Rejected as subordinate and unnecessary.
Covered by Finding 138.
Rejected as subordinate and unnecessary.
Covered by Finding 139.
Rejected as cumulative.
244-250. Covered by Findings 80 through 81 and 145 through 146.
Rulings on Jupiter's Proposed Findings of Fact.
To the extent necessary, covered by Findings 15 and 148.
To the extent necessary, covered by Finding 141.
To the extent necessary, covered by Findings 15 and 148.
Covered by Finding 153.
Rejected as subordinate and unnecessary.
In part, rejected as subordinate and unnecessary and in part, covered by Findings 30 through 36.
In part, covered by and in part, rejected as contrary to Findings 24 through 28.
Rejected as subordinate and unnecessary.
9-10. In part, rejected as cumulative and in part, covered to the extent necessary by Findings 147 through 152.
In part, rejected as cumulative and in part, covered to the extent necessary by Findings 147 through 152. In part, rejected as contrary to the greater weight of the evidence.
Rejected in part as subordinate and unnecessary, and in part, covered by those same Findings 147 through 152.
In part, covered by the absence of any finding that a shortage of general or family practitioners exist that would justify granting the OMHI application. In part, covered by Finding 53(a).
Covered to the extent necessary by Finding 83.
Rejected in part as conclusion of law and in part as subordinate and unnecessary, and in part as cumulative.
16-21. To the extent necessary and not subordinate, covered by Findings 53 through 75.
To the extent necessary, covered by Finding 29.
Rejected as subordinate and unnecessary.
Rejected as subordinate and unnecessary.
Rejected as conclusion of law.
Covered by Finding 33.
Covered by Finding 34.
Covered by Finding 35.
To the extent necessary, covered by Finding 37.
To the extent necessary, covered by Finding 48.
In part, covered by Finding 49 and in part, rejected as conclusion of
law.
In part, covered by Finding 50, and in part, rejected as subordinate
and unnecessary.
Covered by Finding 52.
To the extent necessary, covered by Finding 86.
To the extent necessary, covered by Finding 86.
36-37. To the extent necessary, covered by Findings 89 through 91.
To the extent necessary, covered by Findings 87, 88 and 91 through 92.
To the extent necessary, covered by Findings 87 through 92.
Covered by 93.
Rejected in part as unnecessary and in part as subordinate and unpersuasive.
42-43. Covered by Finding 94.
Covered by Finding 80.
Covered by Finding 82 through 84.
Rulings on NME's Proposed Findings Of Fact.
1-2. Covered by Finding 2.
3-7. Rejected as subordinate and unnecessary.
In part, rejected as subordinate and unnecessary, and in part, covered by Finding 153.
To the extent necessary, covered by Findings 14 and 15.
Covered by Finding 1.
Covered by Finding 7-13.
In part, rejected as conclusion of law and in part, covered by Findings 7 through 13.
To the extent necessary, covered by paragraph 4.
Rejected as subordinate, irrelevant and unnecessary.
15-16. To the extent necessary, covered by Findings 4 through 6.
To the extent necessary, covered by Findings 37 and 80.
To the extent necessary, covered by Findings 37 through 52.
To the extent necessary, and not conclusion of law covered by Findings
76 through 78.
In part, rejected as cumulative and in part, covered by Findings 53 through 75
21-23. Covered by and in part subordinate to Findings 53 through 75. 24-25. To the extent necessary, covered by Findings 86 through 95.
26-29. Covered by and in part subordinate to Findings 53 through 75.
Cumulative. Covered by Findings 37 through 52.
Covered by Findings 86 through 95, 101 and 113 through 121.
Rejected as subordinate and unnecessary. Covered by Findings 80-81 and
146.
Covered by Findings 80-81 and 146. 34-35. Covered by Findings 82-84.
36. Rejected as subordinate and unnecessary.
37-38. To the extent necessary and not subordinate, covered by Findings 14
through 28.
To the extent necessary and not subordinate, covered by Findings 140- 144 and 147-152.
Cumulative covered by Findings 53 through 75.
COPIES FURNISHED:
Steve Turner, Esquire Robert A. Weiss, Esquire Douglas L. Mannheimer, Esquire 118 N. Gadsden Street
Post Office Drawer 11300 Tallahassee, Florida 32301 Tallahassee, Florida 32302
John H. French, Jr., Esquire Byron Mathews, Jr., Esquire James C. Hauser, Esquire McDermott, Will & Emery
P.O. Box 1876 Monroe Park Tower, Suite 1090 Tallahassee, Florida 32302 Tallahassee, Florida 32301
James K. Johnson, Esquire Thomas T. Alspach, Esquire Post Office Box 1489 Post Office Box 1747 Lake Worth, Florida 32301 Easton, Maryland 21601
Kenneth Hoffman, Esquire Michael J. Cherniga, Esquire 2700 Blair Stone Rd. Post Office Drawer 1838
Suite C Tallahassee, Florida 32302 Tallahassee, Florida 32301
Michael Glazer, Esquire Joel T. Strawn, Esquire
C. Gary Williams, Esquire Jones & Foster, P.A. Post Office Box 391 551 S.E. 8th Street Tallahassee, Florida 32301 Suite 101
Delray Beach, Florida 33444
Robert S. Cohen, Esquire Post Office Box 669 Tallahassee, Florida 32302
Frank Santry, Esquire David P. Heath, Esquire Post Office Box 1879 Tallahassee, Florida 32302
William Page, Jr.
Secretary
Department of Health and Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32301
| Issue Date | Proceedings |
|---|---|
| Apr. 08, 1986 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Apr. 08, 1986 | Recommended Order | Given osteopathic hospital bed inventory and need, no need for new 120 bed osteopathic acute care hospital, no fixed pool of beds. |
