Judges: DONALD D. CONN
Agency: Agency for Health Care Administration
Latest Update: Mar. 29, 1988
Summary: Certificate Of Need denied. Parties stipulated no numeric need. Low occupancy rates of area providers. Additional beds would have negative financial impact.
86-1537.PDFSTATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
BREVARD HEALTH SERVICES, and ) FRANK P. FILIBERTO, M.D., d/b/a ) PALM BAY DOCTORS HOSPITAL, )
)
Petitioners, )
)
vs. ) CASE NOS. 86-1537
) 87-0930
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent. )
)
RECOMMENDED ORDER
A final hearing was held in this case on December 9-11 and 15, 1987, in Tallahassee, Florida, before Donald D. Conn, Hearing Officer, Division of Administrative Hearings. The parties were represented as follows:
Petitioner: E. G. Boone, Esquire
Jeffrey A. Boone, Esquire Post Office Box 1596 Venice, Florida 34284 (Brevard Health Services)
Frank P. Filiberto, M.D. 5200 Babcock Street, NE Palm Bay, Florida 32905
(Frank P. Filiberto, M.D., d/b/a Bay Doctors Hospital)
Respondent: Guyte P. McCord, III, Esquire
Post Office Box 82 Tallahassee, Florida 32302
The issue in this case is whether the Department of Health and Rehabilitative Services (Department) should approve the application for a Certificate of Need (CON) submitted by Brevard Health Services, Inc. (CON 4301) for a satellite hospital, or the application submitted by Frank P. Filiberto, M.D., d/b/a Palm Bay Doctors Hospital (CON 4302) for an acute care hospital. At the hearing, eleven witnesses were called on behalf of Brevard Health Services, Inc. (Brevard), which also introduced ten exhibits. The Department called two witnesses and introduced five exhibits, while one additional exhibit offered by the Department was rejected. Dr. Frank P. Filiberto (Filiberto) was not present, and was not represented at the hearing. The transcript of the hearing was filed on February 3, 1988, and the parties were thereafter given until March 11, 1988 to file their proposed recommended orders, including proposed findings of fact. The Appendix to this Recommended Order contains a ruling on each timely filed proposed finding of fact.
FINDINGS OF FACT
Filiberto did not appear, and was not represented, at the final hearing. There is no evidence in the record of the proceeding concerning Filiberto's application for CON 4302.
On or about October 10, 1985 Brevard filed an application with the Department for CON 4301 to construct a 60 bed medical-surgical satellite hospital of Holmes Regional Medical Center (HRMC) in the Palm Bay area of south Brevard County, Florida. This application does not contain any reference to, or information about, a voluntary delicensure or transfer of 60 previously approved beds, but rather seeks approval for 60 "new" beds.
By letter dated February 28, 1986, the Department notified Brevard of its intent to deny this application, and thereafter Brevard timely sought review of the Department's decision.
The parties stipulated as follows:
Brevard's application for CON 4301 meets all statutory criteria, except for criteria set forth in Section 381.705(1)(a), (b), (d) and (1), Florida Statutes (1987).
The Department does not dispute any of the data or information contained in Tables which are a part of Brevard's application, with the exception of Table 10 (Projected Utilization) which is in dispute, and Table 6 (Total Facility Utilization) upon which Brevard does not rely.
There is no numeric need for additional medical- surgical beds in the applicable service district.
Financial feasibility of this project is not at issue.
The site proposed by Brevard for this satellite hospital is an appropriate hospital site.
In certain life-threatening situations, a thirty minute drive time to a hospital may be too long, and in order to protect and save a particular patient's life, less than a thirty minute drive time may be needed.
There is a dispute between the parties concerning the authenticity of the State Agency Action Report (SAAR) introduced at hearing as Brevard's Exhibit
There is no signature page on the SAAR, and a review of all files relating to this matter has failed to locate the missing page, which would also normally contain a summary of the Department's findings. Although Brevard introduced the Exhibit, it did so simply to establish that the SAAR on file at the Department does not evidence approval, through signature, by any authorized representative of the Department. Nevertheless, this SAAR was obtained from the Department's official files concerning the CONs here at issue, and was also authenticated, in part, by Reid Jaffe, consultant supervisor, who prepared the original draft of the SAAR and recalled seeing the final SAAR with a signed signature page. No evidence disputing the authenticity of this document was offered. Therefore, Brevard's Exhibit 4 is accepted for all purposes as the Department's SAAR concerning CONs here at issue.
In view of stipulation 4(c), set forth above, Brevard's case at hearing in support of CON 4301 is largely premised upon the offer of Holmes Regional
Health Care Systems to voluntarily delicense or transfer 60 approved beds at HRMC, a wholly owned and operated non-profit corporate subsidiary of Brevard. The Department deemed Brevard's application complete on December 30, 1985, at which time the application contained no reference to, or information about, a voluntary delicensure and/or transfer of approved beds. In discussions between the parties in January, 1987, Brevard made this offer and on January 27, 1987 the Department informed Brevard of its position "that the change from `new beds' as proposed in the application, to `transferred beds' would be a substantial change in the scope of the project," and as such the Department would consider this to be a "substantial amendment to the application," which it contends is prohibited after an application is deemed complete.
As a significant new issue or factor which was not addressed or raised in any way in Brevard's application prior to it being deemed complete, although its ability to have raised this issue was entirely within Brevard's control, Brevard's offer to voluntarily delicense 60 beds at HRMC if CON 4301 is approved constitutes a substantial amendment of its CON application, rather than an update or supplement of data contained therein. Such an amendment is not permitted after an application is deemed complete because it raises issues which the Department had no way to consider when it reviewed the application and the SAAR was prepared. Additionally, to allow consideration of Brevard's offer at hearing would change the entire need methodology against which this application was reviewed by the Department since the acute care bed need rule, which was properly used to review this application for new beds, is not applicable and cannot be applied to bed transfers. Brevard's offer to voluntarily delicense beds in connection with approval of an equal number of beds at a satellite facility is nothing more than an impermissible, substantial change of its new bed application.
There is currently pending before the Department, in a subsequent batch, an application filed on behalf of HRMC to delicense 6 beds and relocate or transfer those beds to a new satellite hospital in the Palm Bay area. At the time of hearing, the Department had not acted upon this subsequent application.
HRMC is a 528 bed acute care hospital located in Melbourne, which is in south Brevard County. Of its 528 licensed beds, 495 are actually in service. Brevard proposed to delicense 60 of these 528 beds at HRMC, which would then result in a net reduction of only 27 beds actually in service at HRMC.
Brevard has proposed in its application to locate a 60 bed satellite hospital of HRMC on a 45 acre site located east of Interstate 95 and north of Malabar Road in Brevard County. This location is immediately south and east of the city limits of Palm Bay, which itself is located south of Melbourne. The site has already been purchased.
The proposed satellite would have 36 private and 12 semi-private rooms. It is proposed to have a primary service area that includes an area from Palm Bay south and west to the county line and bordered on the east by the
intra-coastal waterway, and will serve Medicare, Medicaid, indigent and charity patients, as well as paying patients. HRMC has had an indigent care agreement with Brevard County since 1977, and this proposed satellite would be included in that agreement.
The primary service area of the proposed satellite has been an area of extremely rapid population growth. From 1970 to 1980, the area's population increased 156.3 percent (9,660 to 24,578 residents) compared with Brevard County's 18.7 percent increase. It is estimated that the primary service area's
"phenomenal" population growth will continue through 1990. The population of Palm Bay has grown from 15,000 in 1980 to a current population of 55,000; Palm Bay's growth has been primarily to the south and west, away from HRMC and toward the proposed site of the satellite.
A satellite hospital associated with an established acute care hospital has a number of significant advantages over a new free-standing facility, including the ability to share: administrative and management support; clinical and financial data; data processing; insurance and billing costs; purchasing; and staff orientation and education programs.
Need In Relation To the Applicable Health Plans
The State Agency Action Report (SAAR) prepared by the Department in its review of Brevard's application specifically indicates that this application is consistent with the applicable District 7 Local Health Plan, and therefore Brevard's ability to meet the policies, goals and priorities of the Local Health Plan is not at issue in this case.
Brevard's CON application addresses certain goals, objectives and policies set forth in the 1981 Florida State Health Plan. However, the 1985-87 Florida State Health Plan was adopted prior to the filing of Brevard's CON application at issue in this case, and is therefore applicable to the review of that application.
The Florida State Health Plan sets forth the following pertinent Objectives and Recommended Actions:
By 1989, the ratio of acute care hospital beds to Florida's population (in 1000's) should be less than 4.11. (Objective 1.1)
Restrain increases in the supply of hospital beds in Florida through the state certificate of need program. (Recommended Actions 1.1a and 3.1a)
By 1989, attain an average annual occupancy
rate of at least 80 percent for all non federal, short-stay hospital beds considered
together in each of Florida's eleven HRS districts. (Objective 3.1)
Brevard's application is inconsistent with these Objectives and Recommended Actions. Specifically, it seeks to add 60 new beds to the acute care bed inventory when the bed ratio is already less than 4.11, occupancy rates are significantly below 80 percent, there is a projected surplus of 166 beds in Brevard County for 1990, and the parties have stipulated there is no numeric need for new beds. It is directly contrary to a restraint on the increase of beds. Even if the delicensure and transfer were to be considered, rather than viewing this as an application for 60 new beds, this application is still inconsistent with the State Health Plan because it does nothing to reduce the oversupply of acute care beds, and competent, substantial evidence was not introduced to establish that such a transfer would significantly increase occupancy rates or to otherwise establish a need for these new beds. See also Recommended Action 1.16.
Geographic Accessibility
Brevard's application does not specifically address the issue of accessibility, or set forth reasons why its application should be approved based upon this review criterion. The State Health Plan sets forth the following Objective:
Through 1989, assure that acute care hospital services are available and accessible to urban residents within thirty minutes average one way drive time . . . (Objective 2.2).
The applicable Local Health Plan sets forth the following Priority:
Priority for needed acute care services should be given to those applicants who transfer unutilized beds and/or establish hospital facilities in regions of the District where access to service can be substantially improved by at least 25
minutes for 10 percent of the population . . . (Priority 4).
The SAAR concludes that geographic accessibility is not a problem as it relates to Brevard's application and therefore concludes that this application does not meet this criterion. A travel time sketch prepared by Reid Jaffe is included in the SAAR. Therefore, geographic accessibility is at issue in this proceeding by virtue of the Department's reliance upon this criterion, contained in the SAAR, as a basis of denial. Accordingly, the Department's objections at hearing to the admissibility of travel time data are hereby specifically overruled, and evidence concerning geographic accessibility offered at hearing is admitted, and has been considered.
The residents of Palm Bay and south Brevard County are predominantly located within thirty minutes of HRMC, although the less populated area of south-west Palm Bay, which has recently started to develop, is beyond a thirty minute drive time to HRMC. This finding is based upon the testimony and study of William Tipton, who was accepted as an expert in traffic and transportation engineering, as confirmed and supported by Reid Jaffe's testimony and study contained in the SAAR, and a study performed by Wendy Thomas, who was accepted as an expert in health care planning.
While Peter Wahl, Community Services Director for Brevard County, who was accepted as an expert in county health planning, testified about the inadequacy of access roads and major arterials in Palm Bay, and the increasing problems which will result as the population of Palm Bay continues its extraordinarily rapid growth, ambulance run times which he described from the scene of an accident to existing hospitals were primarily under thirty minutes. Although emergency medical response time is increasing, Wahl's testimony does not establish that the thirty minute drive time standard is being exceeded. Tipton confirmed the characterization of Palm Bay's road system as very poor, and also that as its population increases the traffic delays will worsen.
Quality of Care, Efficiency
HRMC renders quality care, and is a well respected acute care hospital in south Brevard county. As a corporate subsidiary of Brevard, its record of quality care can reasonably be expected to continue at the proposed satellite hospital.
As set forth in Finding of Fact 13, above, a satellite hospital has a number of significant advantages over a new free-standing hospital. These advantages contribute to the efficient operation of such a satellite.
Availability and Adequacy of Alternatives
Brevard has not shown that other health care facilities and services, such as outpatient care and ambulatory services, are inadequate or cannot serve as alternatives to the proposed satellite hospital. There are a surplus of beds available.
HRMC had only a 70.8 percent occupancy rate in 1985, and the SAAR reports that the occupancy rate for acute care beds in Brevard County in 1985, including HRMC, was only 68 percent. Thus, although HRMC's share of south Brevard County patients was approximately 87 percent, there are still surplus beds available at HRMC as well as other area hospitals.
HRMC currently operates an out-patient, ambulatory service facility in Palm Bay on the site of the proposed satellite.
Impact of the Proposed Project
HRMC would experience a slight negative financial impact until approximately 1992 if the satellite were constructed. After 1992 both the satellite and HRMC would have recouped losses and start-up costs.
Patient charges at HRMC are lower than at other hospitals in the service district, and would continue to be lower if the satellite were constructed. In addition, because of the cost-sharing and efficiencies which would result from the satellite hospital's affiliation with HRMC, the proposed satellite would be able to operate with lower patient charges than a new free- standing hospital.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this cause. Section 120.57(1), Florida Statutes. Applicants for CONs bear the burden of establishing their entitlement to the certification of need they seek. Florida Department of Transportation v. J.W.C. Co., Inc., 396 So.2d 778 (Fla. 1st DCA 1981). Specifically, they must meet the criteria set forth in Section 381.705, Florida Statutes, and Rule 10- 5.011(1)(m), Florida Administrative Code.
As set forth in Finding of Fact 1, above, applicant Frank P. Filiberto, M.D., did not appear and was not represented at hearing. No explanation for this absence has been offered. There is no evidence in the record concerning his application for CON 4302, and it must therefore be recommended that this application be denied.
Brevard presented vigorous argument at hearing, as well as in post- hearing filings, in support of the propriety and permissibility of a
consideration of its offer to voluntarily delicense or transfer 60 beds from HRMC to the satellite. It argues that no rule or statute applies to delicensing of beds, and thus the holder of beds, such as HRMC, may delicense beds at any time. However, the issue is not whether a hospital can voluntarily delicense beds, but whether its offer to delicense beds can be considered when it is made after an application for additional beds has been deemed complete and is, thus, not referred to in any way in the CON application which was reviewed by the Department and was the subject of the SAAR.
Substantial amendments to CON applications are prohibited after they have been deemed complete by the Department. See Rule 10-5.010(2)(b) and former Rule 10-5.008(3), Florida Administrative Code. To allow subsequent amendments, would deprive the Department of any opportunity to initially review the matters raised in such amendments and would result in the potential for endless changes to applications approaching, and during, a Section 120.57(1) hearing, thereby making the SAAR virtually meaningless and irrelevant to a changed application presented at hearing.
Although a CON application may not be substantially changed, updated, or amended after it has been deemed complete, certain new evidence can be considered at hearing which is relevant to the original application. In McDonald v. Department of Banking and Finance, 346 So.2d 569, at.584 (Fla. 1st DCA 1977) the District Court of Appeal held as follows:
The agency may appropriately control the number and frequency of amendments to licensing applications and by the rule prevent substantial amendments of the application in mid proceeding. But the hearing officer or agency head conducting
120.57 proceedings should freely consider relevant evidence of changed economic conditions and other current circumstance external to the application. (Emphasis Added)
This holding was clarified by the District Court in Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 783 So.2d 700 at 710 (Fla. 1st DCA 1986), when it stated that "the key to McDonald's holding that evidence of changed conditions or circumstances should be considered in a 120.57 hearing is its requirement that such evidence be `relevant' to the application." The application being considered is the application reviewed by the Department. The Court has recently confirmed this limitation on de novo proceedings, when it affirmed per curiam a Final Order of the Department which, in discussing the Gulf Court decision, stated the following:
The Court narrowed the scope of de novo review noting that it found no
precedential authority requiring de novo review of a CON application in a 120.57 proceeding. Gulf Court at page 709. The de novo concept is applicable only to evidence relevant to the application initially reviewed at HRS. Gulf Court at page 710. (Emphasis Added)
See Florida Health Facilities Corp. vs. Department of Health and Rehabilitative Services, Case No. 87-503, opinion filed January 20, 1988, Fla. 1st DCA.
Based upon these authorities, it is concluded that Brevard's testimony relative to its willingness to delicense 60 acute care beds at HRMC concurrently with the grant of the requested CON constitutes an impermissible amendment of its application. The Department's objection to the relevance of such testimony has therefore been sustained and Brevard's amendment to its application, by which it sought to change this from an application for 60 new beds to an application to transfer 60 beds has not been considered.
This conclusion is supported by the fact that the acute care bed need methodology set forth in Rule 10-5.011(1)(m), Florida Administrative Code, is not applicable to bed transfers. Central Florida Regional Hospital v. Daytona Beach General Hospital, 475 So.2d 974 (Fla. 1st DCA 1985). This application was reviewed on the basis of this rule methodology and the parties have stipulated that this methodology results in no numeric need for additional beds in the applicable service district. To allow Brevard to avoid the effect of this rule, and its stipulation at hearing, by changing its application to a bed transfer would clearly thwart the application process and violate Rule 10-5.008.
Considering Brevard's application for 60 new beds for a satellite hospital, it is concluded that, based upon the parties' stipulations and the evidence presented, Brevard has not sustained its burden of proof. It must therefore be recommended that Brevard's application for CON 4301 be denied.
Brevard's application is contrary to the State Health Plan since it would add 60 beds when a surplus already exists, and occupancy rates are significantly below 80 percent. It does nothing to reduce the oversupply of beds and is contrary to a restraint on new beds. Geographic accessibility has not been shown to be a problem and the 30 minute drive time standard is being met for a predominant number of Palm Bay and south Brevard County residents. While the roads in the area are poor, and sufficient arterial roads are lacking, travel time studies show that most residents are within a thirty minute drive time to HRMC. The future impact of continued population growth is purely speculative and is not a sufficient basis to justify the granting of this CON.
In view of very low occupancy rates at HRMC and other Brevard County hospitals, alternatives to this new satellite clearly exist in the utilization of existing beds. The parties stipulated there is no numeric need for these additional beds. The construction and initial operation of the satellite would have a negative financial impact of HRMC and the satellite until 1992.
A balanced consideration of all statutory and rule criteria against the evidence and stipulations in this case results in the conclusion that Brevard's application must be denied. Department of Health and Rehabilitative Services v. Johnson and Johnson, 447 So.2d 361 (Fla. 1st DCA 1984); NME Hospitals v. Department of Health and Rehabilitative Services, 494 So.2d 256 (Fla. 1st DCA 1986).
RECOMMENDATION
Based upon the foregoing, it is recommended that the Department issue a Final Order denying CON applications 4301 and 4302.
DONE AND ENTERED this 29th day of March, 1988, in Tallahassee, Florida.
DONALD D. CONN
Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 29th day of March, 1988.
APPENDIX TO RECOMMENDED ORDER, CASE NOS. 86-1537
87-0930
Rulings on Brevard's Proposed Findings of Fact:
Adopted in Findings of Fact 2, 9.
Adopted in Findings of Fact 3, 6.
Adopted in Findings of Fact 3, 5 but otherwise Rejected as unnecessary.
4-5 Rejected in Findings of Fact 5.
Adopted in Findings of Fact 4(c), 6, 7, 25, but Rejected as to any stipulated need based upon the access. While this was the position of Brevard, it was opposed by the Respondent.
Rejected as irrelevant and not based upon competent substantial evidence.
8-9 Adopted and Rejected in part in Finding of Fact 20.
Rejected as unnecessary, cumulative and otherwise irrelevant.
Adopted in Finding of Fact 19, but otherwise Rejected as unnecessary.
Adopted in Finding of Fact 20.
13-14 Rejected in Finding of Fact 19 and as otherwise unnecessary and irrelevant.
15 Adopted in Finding of Fact 4(e) but otherwise Rejected as unnecessary.
16-18 Rejected as irrelevant, and as simply a summation of testimony, and as otherwise not based on competent substantial evidence.
Adopted in Finding of Fact 11.
Rejected in Finding of Fact 19, and otherwise as irrelevant.
Adopted in Finding of Fact 14 but Rejected in Findings of Fact 16, 17.
Rejected in Finding of Fact 15 and otherwise as simply a summation of testimony.
Rejected in Findings of Fact 16, 17 and otherwise as irrelevant.
24-25 Adopted in Findings of Fact 4(d), 26, but otherwise Rejected as irrelevant and unnecessary.
26-27 Rejected as irrelevant in view of Findings of Fact 6,7.
Adopted in Finding of Fact 27.
Adopted in Finding of Fact 26.
Adopted in Findings of Fact 13, 27.
Rejected in Finding of Fact 24.
Adopted in part in Finding of Fact 10, otherwise Rejected as irrelevant and unnecessary.
Rejected as irrelevant.
Rulings on the Department's Proposed Findings of Fact:
Adopted in Findings of Fact 1, 2.
Adopted in Finding of Fact 3.
Adopted in Finding of Fact 4. The parties' stipulation is set forth in Finding of Fact 4.
Adopted in Findings of Fact 4(c), 17.
Adopted in Finding of Fact 17.
6-7 Adopted in Findings of Fact 6, 7.
Adopted in Findings of Fact 18, 19.
Adopted in Findings of Fact 4(c), 17, 24.
COPIES FURNISHED:
E. G. Boone, Esquire Jeffrey A. Boone, Esquire Post Office Box 1596 Venice, Florida 34284
Frank P. Filiberto, M.D. 5200 Babcock Street, NE Palm Bay, Florida 32905
Guyte P. McCord, III, Esquire Post Office Box 82 Tallahassee, Florida 32302
Gregory L. Coler Secretary
Department of Health and Rehabilitative Services
1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700
Sam Power Clerk
Department of Health and Rehabilitative Services
1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700
================================================================= DOAH ORDER RULING ON MOTION TO STRIKE
=================================================================
STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
BREVARD HEALTH SERVICES, and ) FRANK P. FILIBERTO, M.D., d/b/a ) PALM BAY DOCTORS HOSPITAL, )
)
Petitioners, )
)
vs. ) CASE NOS. 86-1537
) 87-0930
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent. )
)
ORDER
On March 25, 1988 a Motion To Strike Portions of the Department's Proposed Findings of Fact and Conclusions of Law was filed on behalf of Brevard Health Services. This Motion primarily sets forth Brevard's disagreement with the Department's Proposed Findings of Fact and Conclusions of Law and is in effect, a reply to the Department's post-hearing filing and a further argument on the evidence. There is no provision for a reply to a party's Proposed Findings of Fact and Conclusions of Law. The matters raised by Brevard have been considered and ruled upon in the Recommended Order, with Appendix, filed in this case.
Accordingly, it is
ORDERED that Brevard's Motion is DENIED.
DONE AND ORDERED this 29th day of March, 1988, in Tallahassee, Florida.
DONALD D. CONN
Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 29th day of March, 1988.
COPIES FURNISHED:
E. G. Boone, Esquire Jeffrey A. Boone, Esquire Post Office Box 1596 Venice, Florida 34284
Frank P. Filiberto, M.D. 5200 Babcock Street, NE Palm Bay, Florida 32905
Guyte P. McCord, III, Esquire Post Office Box 82 Tallahassee, Florida 32302
Docket for Case No: 86-001537
Orders for Case No: 86-001537
| Issue Date |
Document |
Summary |
|
May 02, 1988 |
Agency Final Order
|
|
|
Mar. 29, 1988 |
Recommended Order
|
Certificate Of Need denied. Parties stipulated no numeric need. Low occupancy rates of area providers. Additional beds would have negative financial impact.
|
