Freedman, an obstetrician and gynecologist practicing in Jacksonville; and Thomas J. introduced Surgicare Exhibits 1-11 and 13. Respondent, DHRS, presented the testimony of Reid Spencer Jaffe, a medical facilities consultant with that agency, and introduced DHRS Exhibits A & B.
Petitioner presented the testimony of Randall M. Phillips, an employee of SSI responsible for development of ambulatory surgical centers; Mark M. Richardson, a health care consultant; and Rick D. Knapp, a financial planner for health care activities, and introduced Petitioner's Exhibits 2-6. Intervenor, Medivision, presented no testimony and introduced no documentary evidence.
Some or all of the parties have submitted post-hearing pleadings which include their position on the facts and the conclusions of law. These positions have been adopted herein only to the extent that they have been adopted in the Findings of Fact or Conclusions of Law which follow. If not contained herein whether expressly or in substance, they have been rejected as contrary to the better weight of the evidence, not supported by the evidence, irrelevant to the issues, or legally erroneous.
Petitioner, SSJ, has been issued a CON to construct a freestanding ambulatory surgical center in Duval County, Florida, which was issued prior to that approved for Surgicare. Medivision is currently an applicant seeking its own CON to establish a similar facility in Duval County as well. Medivision's application, filed in a batching cycle subsequent to that of Surgicare, was preliminarily approved by DHRS in May, 1984 but due to timely petitions to contest the award, the application is currently pending hearing in a separate proceeding.
On September 15, 1983, Surgicare submitted an application to DHRS for a CON to establish a freestanding ambulatory surgical center in Duval County.
Upon review and consideration, the agency found the application to be in conformity with applicable review criteria and standards set out in the pertinent sections of the Health Facilities and Health Services Planning Act and the rules promulgated thereunder, and on February 13, 1984, issued CON No. 2908 to Surgicare III. The CON was for a facility to include three operating rooms to be built at a project cost not in excess of $1,751,000.00.
The facility will contain approximately 11,000 square feet and will be used to perform non-emergency elective surgical procedures where the patient does not remain overnight. Since the facility will operate purely on an out- patient basis, there will be no intermingling of in-patients and out-patients. It is anticipated that the general specialties most likely to utilize the facility are:
ENT
Gynecology
Orthopedics
Opthalmology, and to some degree,
Others.
Procedures of a type likely to be accomplished there include:
Tonsillectomies
D & C
Eye Surgery and
Other general surgical procedures such as:
Dental
Podiatric, and
Plastic surgery.
It is estimated, based on the nationwide experience of the applicant, that between 80-90 percent of the procedures done will be accomplished under general anesthetic. Therefore, it is clear that these are not the simplest of procedures yet not the most complex, either.
Surgicare's leadership is confident that its predictions regarding use rates and the ability to be financially solvent as of the second year, as outlined in the pro-forma statistics submitted with the application, are reasonable and achievable. These estimates are based on inputs from, among other sources, two of the three stockholders in the facility who live in the area and have a feel for its potential. In addition, at the present time, there is only one freestanding ambulatory surgical facility in the county -- that recently opened and currently operated by Petitioner. Consequently, leadership sees good potential for use of Surgicare's facility because its prices will be competitive.
Surgicare's marketing plan is multifaceted. It is envisioned that patients may be drawn from the entire service area which takes in all of Duval County. SSJ's facility is located south and east of the St. Johns River in a heavily populated section of the county where several of the county's general
hospitals are located. No specific site has yet been chosen for Surgicare III's facility. The actual site will be decided upon by the manager of the facility when and if the CON is approved. This decision will be based on input from the realtor and from physicians practicing in the area as to their preferences.
The facility here under question is now estimated to cost approximately
$1.8 million, a sum slightly higher than that indicated in the application. This increase is due to several factors including inflation, the loss of lower interest rates for financing in effect at that time and, to a small degree, the cost of the appeal of the DHRS intent to grant the CON.
As to the financing, an equity of 25 percent of the cost will come from the partners. The remaining 75 percent will be raised through commercial financing. Surgicare and its component partners are fully capable of providing the equity and there should be little difficulty in procuring the remaining 75 percent financing at favorable terms through accepted sources. In the start up phase, the partners have retained an accounting firm to assist in the financing aspect and a health care consulting firm to assist in the preparation of the application and start up.
The Executive Vice-President of MCI, Mr. Moore, in clear and convincing testimony as to the source of funds for the project, indicated that MCI is capable of and intends to provide its 25 percent of the approximately $1.8 million for equity and start-up funding out of current corporate assets. The remaining 75 percent long term financing will be arranged for by MCI, and in that regard, a letter of commitment from one MCI source reveals the availability of a $38 million line of revolving unsecured credit, to be used for interim construction costs, equipment purchases and working capital. Included is a second line of credit consisting of a 10-year loan per location for construction projects -- sufficient to finance 7 or 8 of MCI's pending projects. According to the latest information presented, MCI's current cash reserves are at $22 million in addition to the $38 million referenced above and Mr. Moore feels that is more than adequate to finance all MCI projects currently under construction and proposed. In light of the above, it appears obvious that MCI is a healthy company financially and has the ability to finance all current and proposed projects including that under consideration here notwithstanding the loss reflected in the most recent corporate report. This loss was due to start-up costs and does not relate to operating costs.
Though additional long term financing is available from banks, insurance companies, and other similar financial institutions, firm arrangements for this particular project have not yet been made due to the pendency of the CON process. Upon approval, this financing will be available closer to need, but, if needed, MCI is prepared to pick up the entire cost of this project from current equity and is capable of doing so.
The partners plan for MCI to be issued a contract to manage the facility when it is opened. A medical advisory board will be created to define and maintain medical policy and standards. Physicians in the area will have to seek the privilege to practice at the facility. Patient makeup will be determined by the services and procedures available. Medicare and Medicaid patients will be accepted. It is the policy of Surgicare III to allow for 5 percent charity patients not including the additional provision for bad debts. Charges will be determined at some future date on the basis of the local economic environment of the community, the local demand, the procedure mix, and the impact of competing facilities.
When the letter of intent to file for this proposed facility was submitted, the applicants consisted of three individuals: Dr. Hightower, Dr. Jenkins, and Mr. Fort, doing business as Surgicare III of Jacksonville, Inc., a Florida Corporation. Before the application for the CON was filed, the three original partners were joined by Surgicare Corporation. After the application was filed, Surgicare Corporation was purchased by MCI, a nationwide provider of ambulatory surgery centers. At the present time, then, Surgicare III is made up of Surgicare III of Jacksonville, Inc., and Surgicare Corporation, a wholly- owned subsidiary of MCI. Surgicare Corporation functions as the managing partner.
Surgicare III, through the testimony of Dr. Battaglia and others, established that a mixture of minor surgery such as is performed in ambulatory surgical centers, with more seriously ill patients, as would be the case in a hospital setting, is not beneficial for the less seriously ill patient. In addition, the use of hospitals for outpatient surgery on these individuals is somewhat unwieldy for a variety of reasons such as the time spent waiting for a vacancy in the preparation of an operating room and the time spent in waiting for the results of lab work. In the freestanding outpatient situation, a more beneficial climate exists. Generally, surgery starts on time and schedules can be utilized and followed better. Operating room turnover time is much shorter than in the hospital because of standardization of procedures. As a result, time management is enhanced and becomes one of the bigger benefits to the patient, the physician, and the facility. Because of the less institutionalized setting, patients are less intimidated by their surroundings and appear to be more content. Costs to the patient are generally substantially lower in the freestanding situation. Estimates given indicate freestanding surgery costs are up to 30 percent less than outpatient surgical costs incurred in hospitals, and up to 60-70 percent lower than the same procedure performed when the patient is in an inpatient, hospitalized situation. Dr. Battaglia estimated that the current charge to a patient for outpatient surgery at the Texas Outpatient Surgery Care facility, an MCI facility, where he is currently the medical director, is approximately $400.00, exclusive of the physician's fee.
Even if the hospitals currently permitting outpatient surgery on an "as available" basis were to dedicate operating rooms and support services in their facilities to this type of procedure, it is Dr. Battaglia's opinion that the other negative aspects of hospital service would still make the freestanding outpatient surgery concept more desirable and advantageous.
Similar sentiments are expressed by Dr. Shirley, an orthopedic surgeon affiliated with SSJ's Jacksonville facility. He supports the freestanding ambulatory surgery center concept because:
It is normally small enough to be convenient for the patient and the physician;
It is cost effective resulting in substantial savings in health care costs, (in his opinion between $900.00 and
$1,000.00 per patient per treatment);
The physician has more input as to
how things are run and, in his opinion, these facilities are more receptive to the physician's needs;
The patient's family has greater access and can play a more supportive role in the process, and
There are substantial time savings to be had by the use of this type of facility.
Dr. Shirley, who currently performs surgery at Baptist Hospital in Jacksonville, and who is on Petitioner's advisory board for its new Jacksonville facility, presently does approximately 30 outpatient surgery procedures per year. He expects this to increase radically with the increased availability of operating rooms due to the advent of the FASC. He can schedule better and can, thereby, do more procedures. He expects his total to increase to approximately
350 arthroscopic procedures per year of which approximately 75 percent will be done on an outpatient basis.
At present he finds the practice of outpatient surgery in a hospital setting very inconvenient to both his patients and himself. Because of this and for other reasons stated below, he supports a second FASC in the county even in competition with the one with which he is affiliated. These supplemental reasons include:
The reasons cited above, which support the concept of the FASC, support a second facility as well as the first;
Competition between FASC's will reduce costs to the patient.
Competition with the hospitals will
also reduce costs and provide better service; and
Another facility in the county will provide greater convenience to the patients.
Even though Baptist Hospital has plans to open an outpatient surgery facility next to the hospital soon at which he will practice and which, he believes, will alleviate some of the problem, it will not have any substantial effect on the geographical problems existing and for this reason, Dr. Shirley believes the area will support a second FASC -- especially in light of changing reimbursement rules.
These concepts are also supported by Dr. Donald S. Freedman, an obstetrician/gynecologist practicing in Jacksonville who reiterates the cost and time saving arguments of his colleagues. In his opinion, the FASC concept would reduce the hospital charges for similar procedures by 50 to 60 percent and would remove the very real problem of ambulatory surgery patients being bumped from scheduled surgery within the hospital setting due to over or emergency scheduling. He also supports the establishment of a second FASC because of its competitive status.
MCI's accountant, Lamar Blount, has been involved extensively in this project from the inception of the CON application and its revisions. His review of the underlying assumptions and projections regarding the methodology for evaluation of this project indicates that they are reasonable and appropriate. On the projections most recently available to him, he sees a projected operational loss of approximately $111,000.00 for this facility during the first year. This loss is not unusual and is expected. The profit shown for the second year of operation is due to an almost doubling of the number of procedures expected to be performed and he considers this figure to be reasonable.
The break-even point was calculated by dividing the total fixed cost figure by the charge per procedure less the variable cot figure. This figure is
a projection of the facility's ability to support itself and applying the formula to the accepted numbers for this facility, the break-even point is established at 2,093 procedures.
It is estimated that the number of procedures to be performed during the second year will be 3,016. Since the break-even point is 2,093 the estimate of procedures could be reduced by nearly 1,000 and the facility could still support itself.
With regard to the relationship of FASC's to Medicare and the benefits to be derived therefrom, Medicare encourages the use of ambulatory surgery centers by waiving the co-insurance and patient contribution requirements it imposes on other facilities. Here Medicare pays the entire cost and the patient pays nothing. This would result in a substantial savings to the community in medical costs on Medicare patients alone. Surgicare III's figures in this regard, reflecting a savings of approximately $40,000.00 were based on numbers furnished by the company and tested by its CPA firm which pronounced them reasonable. The test run was based on a comparison of 5 other MCI facilities of similar size and in similar locations. This savings figure was based on a management assumption of an average charge of $450.00 for 1986 which was calculated two different ways. Both methods, start with a 1983 established figure from the other facilities and progress with inflation figures included and both are reasonable.
A financial planning expert testifying for the Petitioner has a radically different opinion here, however. He contends that Surgicare's costs have been substantially understated for both 1986 and 1987 and as a result, its 1987 charge will be more like $597 rather than $490 and may run as high as in excess of $900. If true, this would seriously reduce the projected community savings figure referenced above. That is unlikely, however, in light of the other testimony, and is contrary to the weight of the evidence.
By pre-hearing stipulation, the parties agreed:
The size, design, and construction costs of $964,590 for the proposed facility are reasonable and adequate for intended use.
The proposed equipment and its cost of
$407,885 are reasonable and adequate for the intended use.
The manpower resources in Duval County are sufficient for recruitment and from which Surgicare can reasonably and adequately staff the proposed facility, and the staff salaries are reasonable.
The amended cost figures listed in Table 25 (Estimated Project Costs) in the fol- lowing particulars are reasonable:
(1) Architectural/Engineering fees | $ 68,184 |
(2) Site survey, etc | 9,460 |
(3) Construction | 869,000 |
(4) Inflation costs | 52,140 |
(5) 5 percent Contingency | costs | 43,450 |
(6) Subtotal |
| 964,590 |
(7) Fixed equipment |
| 124,150 |
(8) Movable equipment |
| 283,735 |
(9) Subtotal |
| 407,885 |
(10) Land Acquisition |
| 219,149 |
The projected completion forecast of January 1, 1986, is reasonable.
A thorough study of the proposal and its ramifications was conducted for Surgicare by Dr. Milton Schoeman, a health care consultant headquartered in Atlanta. Since no site for the facility has yet been selected, Dr. Schoeman looked at Duval County as a whole. He found that the county was criss-crossed by major highways facilitating ease of movement among areas. Current providers of surgical services, including Petitioner, are not grouped in any particular area. Physicians represent a broad array of specialties and those most likely to utilize a FASC are well represented.
The county is a large urban area with a relatively young population. People under 45 currently make up approximately 70 percent of the population and that relative percentage is expected to continue. However, BEBR also predicts a growth in the elderly population as well as in the female population. This is the group, in his opinion, most frequently using FASC's. There is a sufficient physician base to support these facilities. The only unusual element is that the current degree of use of outpatient surgery is not as high as it is in other areas. This, however, may be indicative of a need for such facilities.
Dr. Schoeman also examined the present history of utilization of outpatient surgeries to develop a "use rate" -- a factor which allows one to take a defined population and determine what the use of a particular service by that population will be. In the instant case, he determined that outpatient surgery would be used by 108.32 people per 1,000 population considering only Duval County residents.
He next forecasted the number of outpatient surgeries to be expected in the future using a percentage of outpatients ranging from 30 percent in 1986 to 39 percent in 1990. This forecast is an assumption based on historical record and changes in the system, such as the introduction of new facilities or an increase in procedures done by hospitals that would impact on this historical perspective. Based on all this information, he predicts that outpatient surgeries will increase during the projection period from approximately 19,500 in 1986 to 25,970 in 1990.
Looking next to where these procedures would be performed, he deducted from this figure the number he felt would be retained by hospitals and was left with the number of outpatient surgeries left to be performed at FASC's. His figures reflect that 5,026 procedures will be available for FASC's in 1986 and this figure will increase to 8,667 by 1990.
In developing his thesis, Dr. Schoeman concluded that where there are more FASC's there is a greater number of outpatient surgeries performed. He would not necessarily attribute this increase to the additional operating rooms available. It may well be due, in his opinion, to the increase in outpatient procedures done by hospitals because of the increased competition from the FASC's.
The witness concluded that by 1987-1988, and thereafter, there would be adequate demand in Duval County to provide for the proposed services and to justify them. Therefore, he supports the decision by DHRS to grant the CON to Surgicare. He believes that the use of FASC's not only promotes competition but also tends to lower overall health costs by expanding the number and types of procedures to be done in them. Good health planning, aimed at promoting competition and lower costs, dictates that outpatient surgery be encouraged.
Petitioner's health planning expert, called to rebut the conclusions of Dr. Schoeman, utilized two methodologies in his evaluation of the need for additional ambulatory surgery facilities in Duval County. One is similar to that utilized by DHRS in that it incorporates a formula to determine outpatient surgical procedures available to freestanding facilities after deducting those to be performed in existing hospital facilities. Using a 35 percent outpatient surgery target factor and an estimated 1200 procedures per year use rate for each existing facility. Petitioner's expert, Mr. Richardson, concluded that there would be enough capability by 1987-1988 to satisfy the then-existing need for ambulatory surgeries without the addition of Surgicare's facility. This methodology, which relies heavily on the use of hospital "dedicated" operating suites, is, in the opinion of Surgicare, unreliable because, among several reasons, of the presumed inflation of the hospitals' figures on the number of outpatient surgeries to be performed in their facilities. If accurate, however, this method would have the effect of reducing the number of procedures available for the freestanding facilities.
Mr. Richardson also performed his need analysis on a subcounty basis as well as county-wide. In so doing, he applied a district-wide use rate to the projected 1987-1988 populations of the subcounty sector designations of the local health council, thereafter deriving the projected outpatient surgery load for each sector in those two years in the same manner as for the county-wide analysis. Again, the estimated 1200 procedures per suite is utilized as is the number of existing and proposed dedicated suites in the sector. Utilizing this method, Mr. Richardson concluded there were sufficient existing or in- development suites in the southern, northern, and core sectors, but shortages in the west and beach sectors; three suites and one, respectively. This methodology is somewhat suspect and considered misleading by some, however, in that it assumes a continuing out-migration of patients in those areas to other areas for service whether or not the suites are made available in those areas. Neither of these methodologies is considered appropriate here, however, as they are premised on unrealistic figures.
Since all of the above is speculation and based on projections and assumptions a 10 percent shortfall projected by the expert for the opponent of this facility is not particularly significant or controlling. His thesis is applicable to the DHRS analysis as well, but, as he admits, there are any number of ways to calculate unmet needs and he chose the one which put his client in the best light, as did Dr. Schoeman. Several others which could be used with complete validity, since there is no rule on the subject, are totally compatible with the result reached by DHRS.
In that regard, the methodology utilized by the state here is multi- stepped. It:
Determines the surgical use rate, which is;
Applied to the projected second
years figures to get the surgical sue rate
for that year.
Of that figure, the state estimates
29 percent could be done on an outpatient basis which results in a total pool of outpatient procedures.
From the total pool of outpatient
procedures is subtracted that number expected to be done by hospitals which leaves a bal ance for freestanding facilities.
From that balance is subtracted
existing and prior-approved facilities to get the balance available for new applicant facilities. If this balance is sufficient to cover the applicant's break-even point, all other factors being acceptable, the applicant is approved.
In the instant case, Mr. Jaffe, testifying for DHRS, was of the opinion that the 29 percent figure was conservative. Utilizing the above methodology, after deducting for all existing facilities, including Petitioner's, there were still in excess of 3,500 procedures for which there was an unfulfilled need. This was far in excess of Surgicare's break-even point estimated in its pro-forma, and, all other requirements being met, the agency's authorities were satisfied the need for this facility was established.
The break-even point is used in an attempt to prevent needless expenditure of funds if the applicant cannot operate profitably. If the applicant cannot operate at a profit, it will increase its charges until it does. Since the basic reason for health planning is to keep health care costs as low as possible, all branches of government are trying to find ways to provide quality health care at a lower cost. The use of the freestanding ambulatory surgical center is a less costly alternative which provides the same quality care.
In the instant case, DHRS was satisfied, and it is also found here, that Surgicare III has the ability to construct and operate the facility. Assuming an appropriate location, it appears to be financially feasible over both the short and long term.
While need is the first and primary factor considered by DHRS in analysis of CON applications, once need is established, other factors are also considered. These factors include, inter alia.
alternatives to the proposed service,
effects on charges for the service in the community,
access to the proposed facility for the public,
financial feasibility, and
the effect of competition on others
who provide or who have applied for authority to provide the service.
The whole process is designed to generate economic competition to keep costs to the public down. In this case without competition from other freestanding facilities, while it is likely that SSJ would set its prices lower than those of the existing hospitals, they would not be set as low as if there were competition from a like facility.
It should be noted, as alluded to above, that much of the basis for decision is made up of estimates, projections, and uncorroborated responses of other interested providers. Consequently, the methodology used by DHRS and both experts, while superficially precise, is, in reality, fraught with a lack of preciseness. This is because, (a) those providers solicited to present information on their activities are not required to respond at all; (b) there is no way to guarantee the accuracy of the information they submit; and, (c) there is a lack of definition in describing the nature of the information sought and provided. For example, the term "procedures" has not been defined precisely for this purpose. It may mean either diagnostic or surgical procedure, which are not the same in either complexity or time consumption. Also, there is a question as to whether the term "procedure" means the total case, or each part thereof. There may be many procedures accomplished in a particular case.
In the instant case, of all the hospitals polled, only one facility reported any difficulty with the numbers and it, in its report, included a relatively high number of diagnostic procedures which, realistically, should not impact on this study. Both SSJ and Surgicare placed great emphasis on the number of cases reported by this facility but it appears that it has, in the opinion of DHRS health planners, historically been unreliable in its reporting of figures. As a result, DHRS has compensated for this inaccuracy in utilizing this hospital's figures.
Therefore, even when this particular hospital's figures are compensated for, the unfulfilled need, after subtracting out the full allowance for SSJ, would stand at 1,889. This is close enough to Surgicare's break-even point to merely require DHRS to look at the other factors mentioned above. In other words, even compensating for the possibility that the need was misstated by virtue of one reporting hospital's inaccurate figures, the end result is close enough so that looking at all factors, not only need, DHRS could properly approve Surgicare's application.
Petitioner, nonetheless, presented evidence to show the effect that Surgicare's facility would have on its own. SSJ's primary service area is within an 8-10 mile radius out from its location on the south side of the St. John's River. Its secondary service area is the entire county. Its current competition in ambulatory surgery is:
Memorial Hospital, which has a freestanding 4 OR unit under construction;
St. Luke's Hospital, a new facility which will have a freestanding 2 OR unit;
Jacksonville General Hospital, which has two dedicated OR's in its facility; and
Baptist Hospital which has a
freestanding 3 OR unit under construction.
All of the above are within the southern area of the city. There are, however, other hospitals in other areas such as the core and the west side which also have OR's within their facilities dedicated to ambulatory surgery. This increase of competition, aliunde Surgicare's proposed facility, has already resulted in several of the providers dropping their rates, some as much as 40-50 percent.
Petitioner's financial planner, Mr. Richardson, assessing the impact of Surgicare's operation on SSJ, feels it will be considerable. In his opinion, the opening of Surgicare's facility will cause a loss of approximately 448 cases in 1986 for a net revenue loss of $150,000.00, and 786 cases in 1987 for a net revenue loss of $258,000.00. He predicts that as a result of these losses, SSJ will have to cut costs to stay financially viable. When it has done all it can do to cut costs, it will then have to start raising charges in order to stay in business.
In summary, he concludes that since, in his opinion, there is already a county-wide surplus of facilities, Surgicare's new center would interfere with SSJ and the others already there (hospitals) reaching the level of operation they were approved for. He rejects Dr. Schoeman's analysis as not being based on the most accurate figures and concludes there would be only 1800 cases available for Surgicare in 1987, after deducting from the pool a full case load for SSJ.
These figures, however, do not take into consideration other alternatives such as refinancing of long term debt nor do they consider what the impact would be if Surgicare were to locate in an area other than where SSJ is located. If that were to be done, even this witness concedes the impact on SSJ would be less than he predicts. Therefore, his analysis appears to be excessively pessimistic and is unlikely.
Randall M. Phillips, an investor with an employee of Petitioner, SSI, indicated no opposition to Surgicare's opening its facility either north and west of the river or further south and east. He would, however, as would SSJ, strongly object to Surgicare coming into what he considers SSJ's primary service area, especially in light of the increased competition by others in recent months as outlined above.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of these proceedings.
In the prehearing stipulation filed in this case, the parties agreed that only selected Subsections of Section 381.494(6)(c), Florida Statutes, would be pertinent to the issues in this case. They are Subsections 2, 4, 5, 8, 9, and 12, and are discussed individually below.
(2) The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospic es in the service district of the applicant.
At the present time, Petitioner is the only freestanding ambulatory surgical facility in Duval County. Several existing hospitals either have or plan ambulatory surgical facilities as a part of their operation. In at least
two instances, these will be freestanding but near the main plant and operated as a part thereof. Even if in their freestanding units, the services offered by hospitals cannot reasonably be compared to those of an independent freestanding facility such as that proposed and that operated by SSJ. Costs are lower and convenience to the patient and the physician is substantially greater in the freestanding facility. Consequently, it may fairly be said that at the present time, Petitioner is the only true competition to Surgicare and, aside from another independent applicant who intervened in this case, its only formal opposition.
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
alternates for the health care facilities
and services to be provided by the applicant.
Again here, as with regard to the criterion discussed next above, it cannot be said reasonably, that the ambulatory surgery performed in a hospital setting is a valid comparison to the proposed service. While both are ambulatory and both are surgery, they are more like cousins than siblings. The negative factors inherent in the hospital-related unit, even if freestanding, are simply not present in the independent freestanding unit and the cost differential is an important consideration.
Probable economies and improvements in service that may be derived from operation of joint, cooperative,
or shared health care resources.
Even though the parties stipulated this criterion was in issue prior to the hearing, neither argued it nor was it treated in the evidence or in post hearing submissions. In any event, the facilities which are the subject matter of this hearing are not normally consistent with shared or cooperative resources, and in light of these factors, it is concluded that this criterion is not in issue or pertinent to this hearing
(8) The availability of funds for capital and operating expenditures, for project accomplishment and opera tions, and the extent to which the proposed services will be accessible
to all residents of the service district.
The testimony of Mr. Moore, of MCI, parent corporation of Surgicare III, clearly indicates that adequate funds exist in equity, supplemented by an extensive line of credit, to provide for all construction, equipment, and operational needs for the foreseeable future. While no site for the proposed facility was identified as of the hearing, a review of a map of the area clearly shows a road network which facilitates reasonable and easy access to the residents throughout Duval County, the service district involved. This fact was confirmed by the testimony of Dr. Schoeman, Surgicare's health planning expert.
(12) The probable impact of the proposed project on the cost 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.
The evidence clearly establishes the great likelihood that the Surgicare facility, wherever located, will have a substantial and salutary effect on the cost of receiving outpatient surgery. Charges should be significantly reduced. This prediction is already showing fulfillment in the lowering of charges by hospitals for similar procedures as a result of the opening of Petitioner's facility. Surgicare was able to show, and Petitioner could not successfully rebut, a likelihood of substantial reduction in the total community cost for this service through reduction in both the patient and government sections of Medicare charges. The increased competition engendered through the operation of Surgicare's facility will most likely improve the overall effectiveness, cost, and availability of this service in the district. Any negative effect should be minimal.
While it appears obvious that the best interests of both Petitioner and Surgicare would be served by the location of the Surgicare facility in an area somewhat removed from that where Petitioner's facility is located, the Duval County district is not subdistricted. As a result, approval of the CON cannot necessarily be conditioned upon location of the facility in a particular site. However, good business judgment and economic concerns should result in appropriate siting of the facility.
From analysis of the above, it is obvious that Surgicare's application is consistent with the applicable criteria enumerated in the pertinent listed sections of the Florida Statutes and the related rules promulgated thereunder.
