STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
ST. ANTHONY'S HOSPITAL, )
)
Petitioner, )
)
vs. ) CASE NO. 88-0637
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent. )
and )
) BAYFRONT MEDICAL CENTER, and ) ALL CHILDREN'S HOSPITAL, )
)
Intervenors. )
)
RECOMMENDED ORDER
A hearing was held in this case in Tallahassee, Florida during the period October 31 through November 2, 1988 before Arnold H. Pollock, Hearing Officer. The issue for consideration was whether Petitioner, St. Anthony's Hospital, should be issued a Certificate of Need for an open heart surgery program at its facility in St. Petersburg, Florida.
APPEARANCES
For Petitioner: Ivan Wood, Esquire
Wood, Lusksinger & Epstein Four Houston Center
1221 Lamar, Suite 1400
Houston, Texas 77010
and
John H. Parker, Jr., Esquire Hudson, Rainer & Dobbs
1200 Carnegie Building
133 Carnegie Way Atlanta, Georgia 30303
For Respondent: Steven M. Presnell, Esquire
Lee Elzie, Esquire MacFarlane, Ferguson, Allison
and Kelly
804 First Florida Bank Building Tallahassee, Florida 32301
For Intervenors: Gerald B. Sternstein, Esquire All Children's H. Darrell White, Jr.
Hospital McFarlain, Sternstein, Wiley and Cassedy, P.A.
600 First Florida Bank Building Tallahassee, Florida 32301
Bayfront Medical Michael J. Cherniga, Esquire Center Roberts, Baggett, LaFace & Richard
101 East College Avenue Tallahassee, Florida 32301
BACKGROUND INFORMATION
On February 1, 1988, Petitioner herein, St. Anthony's Hospital (St.
Anthony's) filed a Petition for Formal Administrative Hearings to contest the denial of its application for a Certificate of Need, (CON) 5273, to establish an open heart surgery program at its facility in St. Petersburg, Florida. The file was, on February 16, 1988, forwarded to the Division of Administrative Hearings for appointment of a Hearing Officer. Thereafter, on February 25, 1988, and on March 18, 1988, respectively, All Children's Hospital, (All Children's) and Bayfront Medical Center, (Bayfront), filed Petitions to Intervene which were granted by the undersigned.
At the hearing, which commenced on October 31, 1988 as scheduled, St.
Anthony's presented the testimony of Daniel T. McMurray, President and CEO of St. Anthony's and an expert in hospital administration; Rhonda S. Russick, Executive Vice-President , hospital administrator, and chief operating officer at St. Anthony's and an expert in hospital administration; Dr. Deborah S. Kolb, consultant and expert in the field of health planning; Dr. Tom Harry West, general surgeon in St. Petersburg, Florida and an expert in surgery; Dr. George
R. Daicoff, thoracic and cardiovascular surgeon in St. Petersburg, Florida and an expert in surgery; Dr. Frank LaCamera, Jr., a cardiologist; Dr. Carlos M. Estevez, a cardiologist in St. Petersburg and expert in cardiology; Dr. Charles
Donegan, clinical cardiologist; Reid Jaffe, Consultant Supervisor in the Department's Office of Regulation and Health Facilities; and Sharon Gordon- Girvin, Administrator of the Department's Office of Community Health Services and Facilities. It also introduced St. Anthony's Exhibits 1 through 12 and 16 and 17. It also had identified Exhibits 13 through 15 which were not admitted.
All Children's Hospital introduced the testimony of John D. Sexton, President and CEO of All Children's and an expert in hospital administration; and Gene Nelson, a health care consultant, and introduced All Children's Exhibits 1 through 6. Bayfront presented the testimony of Dr. James L. Mason, a cardiologist in St. Petersburg and expert in surgery; James W. Albright, President and CEO of the holding company which owns Bayfront Hospital; and Michael C. Carroll, health care consultant and an expert in health care planning; and introduced Bayfront's Exhibits 1 through 4. Bayfront Exhibit 5 was identified but not admitted. Respondent, Department of Health and Rehabilitative Services, (Department), introduced Respondent's Exhibit 1.
Subsequent to the hearing, all parties submitted Proposed Findings of Fact which have been individually ruled upon in the Appendix to this Recommended Order.
FINDINGS OF FACT
St. Anthony's is a 434 bed nonprofit acute care hospital located in St. Petersburg, Florida.
On September 15, 1987, St. Anthony's filed an application for a CON to establish and implement an open heart surgery program in its facility. The Department filed a notice of intent to deny the application in January, 1988, and thereafter, St. Anthony's filed a Petition for Formal Administrative Hearing to contest the denial. Intervenors, All Children's and Bayfront sought and were granted leave to intervene in the proceeding.
By Pre-hearing Stipulation, the parties have agreed to the following Findings of Fact:
Each of the parties has a record of providing good quality of
care.
The licensure and accreditation of each party is not at issue and
need not be proven.
The equipment proposed by St. Anthony's in its application is adequate and the costs projected for that equipment are reasonable.
The staffing levels and related salaries as proposed by St. Anthony's in its application are appropriate and reasonable.
The architectural plans and related costs for St. Anthony's proposed project are appropriate and reasonable.
The total project costs proposed by St. Anthony's in its application are appropriate and reasonable.
St. Anthony's has the ability to finance the project costs.
Projected revenues and expenses set out in the pro forma financial projections by St. Anthony's are reasonable.
St. Anthony's presently provides a full range of acute, general, medical, and surgical services, and surgical subspecialties including neuro- surgery, maxillofacia surgery, thoracic surgery, and peripheral vascular surgery. It also offers broad psychiatric, substance abuse, and obstetrical services and a full time emergency room capability. It also provides cardiology services including cardiac catheterization. It has a historic commitment to cardiology services, establishing a cardiac catheterization lab in 1961, a coronary care unit in 1968, and a holter monitor service in 1973. In 1975, it established the community's first echocardiography laboratory, and as early as 1965, seriously considered establishing an open heart surgery program at the facility. This program was not, however, developed at the time.
St. Anthony's continued its involvement in the area of cardiography and its program covers a full array of diagnostic services including echocardiography, nuclear cardiography, and basic electrocardiography, and possesses a magnetic resonance imaging unit which can be used in the diagnosis of heart problems. Additionally, it has a well equipped vascular laboratory and peripheral vascular disease program as well as a cardiac rehabilitation program and a wellness center that is aimed at early identification and prevention.
St. Anthony's is also the site of the Rogers Heart Foundation, a nonprofit, privately funded foundation established in the late 1950's to perform research, education, and clinical diagnostic studies in the field of cardiovascular diseases. As a result of the activities of the foundation, St. Anthony's is well known by physicians in the area as a center for cardiac training and expertise, and until recently, was a participant with Emory University in that institution's cardiac fellowship training program.
St. Anthony's has a long tradition in the service area for providing indigent services and is one of the major providers of charity and indigent care in Pinellas County. This care is provided through direct free care to patients as well as discounted charges and the write-off of bad debts. It also provides services through Medicaid and through write-off of Medicare deductible and coinsurance portions of patients' charges.
All Children's Hospital is a 113 bed children's hospital located in St. Petersburg approximately two miles from St. Anthony's. It is a full service tertiary facility which serves as a referral center for children from throughout the State of Florida and currently has an approved CON for an additional 55 beds. Following construction, which is due to begin in February, 1989, All Children's will have 6 operating rooms, 2 cardiac catheterization labs, and 5 additional surgical intensive care unit beds for a total of 13 ICU beds. At the present time it has 2 operating rooms used for open heart surgery and 2 cardiac catheterization labs. The hospital has a strong affiliation with the University of South Florida College of Medicine in Tampa.
All Children's open heart program began several years after the hospital opened its first cardiac catheterization lab for children in the early 1970's. This came about when several cardiologists whose patients were primarily adult, and who were unable to utilize the facilities at the Rogers Heart Foundation because of its closed status, asked to make use of All Children's cardiac catheterization unite. Since this was consistent with All Children's efforts to increase the quality of its program through higher volume, All Children's began making its services available to adults admitted to Bayfront Hospital, a neighboring facility, with cardiac catheterization done by the patient's cardiologist in the All Children's facility.
All Children's currently has 3 pediatric cardiologists and approximately 12 to 15 adult cardiologists on staff. The primary cardiac surgical team consists of Drs. Daicoff and Botero.
At the present time, approximately 34% of the adult and pediatric patients treated at All Children's are Medicaid patients. Uncompensated indigent care provided at All Children's ranged from 16.52% in 1986 to 18.03% in 1987 and Medicaid patient days ranged from 30.4% in 1986 to 34.2% in 1987. Bayfront's uncompensated care was 22.15% in 1986 and 23.93% in 1987 while Medicaid patient days for that facility were 7.6% in 1986 and 8.9% in 1987. St. Anthony's devoted 1.2% of its total patient days in 1986 to Medicaid patients and 2.3% of it's total patient days in 1987.
Bayfront is a 518 bed not-for-profit, full service acute care hospital located in St. Petersburg adjacent to All Children's. It was founded prior to 1968 as Mound Park Hospital, owned by the City of St. Petersburg, but in 1968, separated from city ownership and became known as Bay front Medical Center. Its mission is to provide care to all citizens in St. Petersburg and the surrounding area regardless of their ability to pay, and it offers a full range of services
with the pediatric component provided by its neighbor, All Children's. It has
450 physicians on medical staff. Bayfront serves as a teaching hospital working in conjunction with the University of South Florida Medical School and providing a residency program in Pinellas County covering the entire spectrum of health care training at the facility.
Bayfront runs a comprehensive cancer service approved by the American College of Surgeons and its obstetrical and gynecological women's service accounts for approximately 4,500 births per year. With All Children's, it participates in a prenatology program for high risk mothers and infants as part of a regional care program.
Bayfront provides helicopter emergency coverage for its trauma center which averages 50,000 emergency room visits per year. The trauma service, staffed on a 24 hour a day basis by a full complement of surgeons, includes open heart surgery capability available for trauma related heart surgery needs.
All Children's and Bayfront are connected to each other by an enclosed passageway. Taken together, the primary service area of the three hospital parties to this action is the southern half of Pinellas County up to approximately Ulmerton Road. Because of their geographical proximity to each other and their diverse but complementary populations, All Children's and Bayfront have developed working programs on a shared service basis in an effort to hold down the cost of health care in the community and to avoid unnecessary duplication of service. The Department has recognized and continues to recognize the shared nature of the All Children's/Bayfront open heart surgery program and the Boards of Directors of both institutions, as early as 1975, agreed to share open heart surgery services.
The shared program for cardiac catheterization and open heart surgery are now known as the "Cardiac Center of Excellence". Under the "Center" concept, diagnostic services are shared. All Children's Hospital's previously described cardiac catheterization laboratory and its non-invasive diagnostic study equipment is complemented by Bayfront's cardiac catheterization laboratory and its non-invasive diagnostic services including EKG, 2-D echo color flow doppler, magnetic resonance imaging, holter monitoring, and stress testing.
Not only are diagnostic services shared by the two facilities but therapeutic services are shared as well. All Children's provides 2 open heart surgery operating suites, percutaneous transluminal coronary angioplasty, laser angioplasty, and intensive care units for children and adult post operative patients. Bayfront provides laser angioplasty and its cardiac catheterization laboratory has the capability to do emergency angioplasty procedures. Once these have been accomplished, Bayfront has a coronary care unit, a surgical unit for post operative patients, and a progressive care unit for its adult patients progressing toward discharge.
Transportation services are also shared as are rehabilitation services. All Children's mobile intensive care unit is available to provide ground transportation for adults and children and it has entered into appropriate cardiac transportation protocols with outlying hospitals. Bayfront provides helicopter transportation for children and adults to its trauma center and, too, has appropriate cardiac transportation protocols similar to those entered into by All Children's. This joint program, which has grown to provide up to date, sophisticated, high quality cardiac care to both adults and children, minimizes operating costs and capital investment. An entire range of cardiac services is available with highly trained physicians and professional
staff and state of the art equipment and facilities to both adult and pediatric patients.
When an adult patient requires open heart surgery at the "Center", he is admitted to Bayfront the day prior to surgery where preliminary preparation is accomplished. On the day of surgery, the patient is prepared and Bayfront personnel transport the patient through the underground connection to All Children's where the actual surgery takes place. Subsequent to the surgery, the patient will normally be kept over night at All Children's in a surgical ICU whereupon, barring complications, he is then transferred by Bay front personnel back to Bay front to continue recovery in a cardiac surgical ICU. The remainder of the recovery period, usually lasting about one week for an uncomplicated case, is accomplished at Bayfront, and upon completion of recovery, the patient is discharged from that hospital, returning there for out patient treatment in Bayfront's cardiac rehabilitation program. In an emergency situation, when an adult patient is presented directly to All Children's for angioplasty, All Children arranges with Bayfront to admit the patient there within 24 hours.
For non-Medicare patients, each facility bills the appropriate insurance carrier or patient for the charges for services rendered by each hospital.
The Medicare and Medicaid reimbursement mechanisms by which All Children's and Bayfront are paid for providing open heart surgery differ substantially from the norm. The Health Care Finance Administration, which administers thee Medicare program recognizes the Bayfront/All Children's shared open heart surgery program for adults and has structured its reimbursement mechanism in an appropriate manner to accommodate that shared status. The normal method of fixed DRG payments is not followed.
Because of accreditation requirements, the process becomes somewhat complicated in that the patient must be discharged from one facility and admitted to the other for surgery and vice-versa for recovery. However, representatives of both facilities claim, and there is no evidence to the contrary, that this procedure does not impose any burden on the patient or his family nor does it affect the quality of care. In fact, under the program, both facilities have been able to maintain an excellent quality of care. The physicians who practice there and who testified for St. Anthony's, indicated some scheduling problems relating to the availability of operating rooms at a time desired by the surgeon, but these problems have not affected quality of care and are being resolved through more acute scheduling and the addition of the 2 new surgical suites at All Children's.
Between the two facilities, there are 15 cardiologists on both staffs who refer open heart patients for surgery. There are also 3 cardiovascular surgeons on staff at the two facilities, all of whom are members of the same physician group which exclusively performs open heart surgery under the shared program and which provides backup for all angioplasties in the "Center" program.
One of these, Dr. Daicoff, indicated that although he would prefer the development of a single state of the art heart institute to serve the future needs of southern Pinellas County, he and his group would provide angioplasty backup as well as do surgery at St. Anthony's if the capability were approved and if he could be convinced that the St. Anthony's program would achieve the same level of high quality currently enjoyed by Bayfront and All Children's. Recognizing that the likelihood of a centralized heart institute is remote, Dr. Daicoff favors the approval of St. Anthony's program.
Open heart surgery is currently being performed at two other hospitals in HRS District V, (Pinellas and Pasco Counties). These are the Largo Medical Center and Morton F. Plant Hospital, both of which are located close to the Ulmerton Road dividing line in the center of Pinellas County. These two facilities provide the majority of open heart surgery in the northern portion of Pinellas County and in Pasco County. Nonetheless, an open heart program at Bayonet Point Hospital in Pasco County was approved in December, 1987, not because of numerical need for the project, but because the applicant also sought approval for cardiac catheterization services. In that case, a need was shown for cardiac catheterization services in Pasco County, and a lab at Bayonet Point was approved. Because of the Department rule requiring open heart surgery backup within 30 minutes of a cardiac catheterization lab, no such backup otherwise being available for the Bayonet Point facility, its program was approved as well.
The service area for open heart surgery for the three hospital parties to this proceeding is the St. Petersburg, Florida area. At the present time there are no major referrals to All Children's for open heart surgery from outside this area to the adult program operated in conjunction with Bayfront. The adult program at All Children's/Bayfront is centered around southern Pinellas County, an area in which the rate of growth is somewhat constant and not significant. The majority of growth in the county is located in the north end.
For the fiscal year ending September 30, 1988, 268 adult open heart surgery procedures were performed at All Children's. During the same period,
160 children's cases were performed. During 1984, 257 adult and 48 pediatric open heart surgeries were performed at All Children's; during 1985, 215 adult and 75 pediatric; during 1986, 258 adult and 46 pediatric; and during 1987, 268 adult and 72 pediatric. If all theatres at All Children's were operated on a capacity basis, as many as 520 open heart procedures could be accomplished. This would require performing 2 surgeries per day, 5 days a week, 52 weeks per year. At the present time, nowhere near this load is being carried. St. Anthony's contends this would not be realistic. However, additional capacity exists at All Children's to accommodate increased open heart surgery if required.
The proper time frame for determining the "actual use rate" referenced in the Department's rule for determining need assessment for new open heart surgery services is July, 1986 through June, 1987. During that period, 299 procedures, including pediatric, were performed at All Children's with 432 total procedures being performed at Largo and 392 at Morton F. Plant. This constitutes a total of 1,123 open heart procedures within the District.
St. Anthony's contends that open heart surgery procedures by themselves, however, are net the only factor for consideration. Cardiac catheterization is no longer merely a diagnostic procedure but constitutes a place for acute intervention. Cardiac catheterization practice has increased radically and has carried with it an increase in open heart surgeries. St. Anthony's cannot fully implement a cardiac catheterization program by adding angioplasty without the concomitant open heart surgery capability required for the full operation of angioplasty and its related programs. Without an open heart capability at St. Anthony's, it's ability to provide a full array of non- open heart cardiac catheterization services is constrained. It urges that from a medical standpoint, it would be beneficial to the patient to have acute intervention and angioplasty available at that hospital rather than , as is
presently the case, disrupting cardiac care and courting the danger of additional coronary problems, the risk of which is increased when a patient must be transported to another hospital for the angioplasty and acute intervention procedures.
St. Anthony's asserts that it will lose its reputation, built up over a period of 40 years, for a continuum of quality care if it is not permitted to provide the required surgical background for acute intervention and angioplasty. This is, however, only speculation not supported by any evidence of record.
Rule 10-5.011(f), F.A.C. contains a methodology for determining numerical need for new programs and utilization guidelines for existing and approved programs which the Department uses when assessing the need for new open heart surgery services. Under the terms of the rule, the Department is to consider applications in context with applicable statutory and rule criteria and will not normally approve applications for new open heart surgery programs in a service area unless the conditions of subparagraphs 8 and 11 are met.
Subparagraph 8 provides a formula for computing the projected number of open heart surgical procedures in the service area for the year in which the proposed open heart surgery program would initiate service. This is to be not more than two years into the future. This number, projected for the target year, is determined by multiplying the actual use rate, (the number of procedures per 100,000 population) in the service area for the twelve month period beginning fourteen months prior to the letter of intent deadline for the batching cycle, by the projected population in the service area in the year service is to be initiated. As was stated above, the proper time frame for determining actual use was July, 1986 through June, 1987, and during that period, a total of 1,123 procedures, including pediatric procedures, were performed at the three existing facilities in District V. Midway through the fiscal year cited above, the total population in District V was 1,082,797, resulting in an actual use rate of 103.7 procedures per 100,000 population.
The population projection for the planning horizon is 1,135,819 persons as July 1, 1989, and when the actual use rate of 103.7 per 100,000 is applied, it is anticipated that 1,178 will be performed by July, 1989, the first projected year for the St. Anthony's program, if approved.
Once one has arrived at the projected number of procedures in the target year by applying the methodology contained in paragraph 8 of the rule, one turns to the provisions of subparagraph 11 of the rule which provides for no additional open heart surgery programs unless:
... the service volume of each
existing and approved open heart surgery program within the service area is operating at and is expected to continue to operate at a minimum of 350 adult open heart surgery cases per year or 130 pediatric heart cases per year;
Subparagraph 11b provides:
No additional open heart surgery programs shall be approved which will reduce the volume of existing open heart surgery facilities below 350 open heart
procedures annually for adults and 130 pediatric heart procedures annually, 75 of which are open heart.
In the state agency action report, the Department, in computing need for additional open heart programs, utilized a figure of 1,065 procedures in determining actual use rate which excluded surgeries performed upon children within the district at All Children's. At the hearing, the Department's representative, Mr. Jaffe, agreed that it would be more appropriate to utilize the entire number of procedures, including pediatric, (1,123), in order to develop a more accurate use rate. That is the figure which was used in the analysis in this Recommended Order.
From a review of the provisions of subparagraph 11 of the rule, the
350 procedure standard is to be applied once estimated procedures during the target year are established. Since subparagraph 11a(I) provides for service volume of existing and approved programs, utilization of that figure results in a need for 3.4 programs based on the 1989 estimated procedures. Since 3 programs currently exist, (All Children's/Bayfront, Largo, and Morton F. Plant), and Bayonet Point's program has been approved, this results in a .6 open heart surgery program surplus. Even if Bayonet Point's program is not considered, then a need exists for only .4 programs which, when rounded down, is not sufficient to approve an additional program.
Turning to the utilization provisions of subparagraph 11, it has been the Department's policy to determine utilization of existing programs for the time period over which the use rate is computed, here, July, 1986 through June, 1987. During that period, only 241 adult open heart procedures were performed at Bayfront/All Children's, and in the fiscal year ending September 30, 1988, the combined program accounted for 268 adult procedures. These numbers are not inconsistent with those used by St. Anthony's when adjustments are made to account for that portion of the total surgery figure which pertains to pediatric patients. They are also below the cutoff figure of 350 adult procedures for all existing or approved facilities in the District.
St. Anthony's expert witness, Dr. Kolb, advanced an alternative theory that the "actual use rate" in the methodology established by rule should be adjusted to account for the out-migration of residents of District V to facilities outside the District for open heart surgery. She contended that the actual use rate had to account for all open heart surgeries performed on District residents regardless of where that surgery took place. If that theory were to be applied, then the total number of surgeries for the relevant time frame would have to increased from 1,123 to 1,883, and if that figure is incorporated in the rule computation, utilizing the 350 procedure unit of division, the calculation would show a 2.6 new program need if Bayfront Point were not taken into consideration. If it were, then the need, according to the expert, would be 1.6. Utilizing the Department's policy of rounding up or down as appropriate, even taking into account Bayonet Point, there would be a need for 2 new programs.
However, St. Anthony's position is not well taken here. There is nothing in the Department's rule which by any reasonable interpretation can include an adjustment for out-migration. The Department has consistently applied its own rule to include only procedures performed at facilities in the district to determine actual use rate and this interpretation is both reasonable and justified. By statute, the Department is required to apply a uniform methodology. The data base available from all of the various districts within
the state is not conducive to an application of an adjustment since double counting and the lack of uniformity appear inherent in any non-specified adjustment attempt.
Another flaw in the expert's theory is that out-migrating patients would be recaptured by the development of additional programs within the district. This is not a justified assumption in that the out-migration occurs even though there is currently an underutilized capability within the district and it becomes obvious that many out-migrators go elsewhere for reasons totally unrelated to the availability of quality care within the district. Further, there is a substantial question as to the reliability of the data relied upon by St. Anthony's expert in her calculation of an assumed out-migration percentage. The expert relied upon Med Par data which reports on Medicare patients constituting 55 to 60 percent of the District V population. The expert's assumption that the same percentage of non-Medicare patients would out-migrate as Medicare patients do, is erroneous because experience has established that Medicare referral patterns do not necessarily match those appropriate to the rest of the population. Another factor to consider is that a substantial number of the people who make up the District V population are seasonal residents and many of these individuals return for major surgery, especially of an elective or non-emergency nature, to those areas from which they have come and with which they are most familiar and comfortable.
St. Anthony's expert, in addition to suggesting an alternative to actual use rate, also suggests that instead of using a 350 procedure figure in calculating numerical need, a 200 procedure figure be used because of the independent pediatric program at All Children's Hospital. The Department urges that this be rejected on the basis that it ignores certain salient factors. One of these is that for the purpose of applying rule standards, All Children's/Bayfront's shared service qualifies as a single existing open heart surgery program. Also, open heart procedures, by their nature highly specialized and complex, require costly, highly specialized manpower and facility resources and the application of the rule procedure standard is, even in the eyes of Petitioner's planner, designed to limit unnecessary duplication of resources while maintaining a high quality of care. Petitioner shows no legitimate health care planning purpose for using any figure other than that called for by the rule and applied by the Department, which is found to be reasonable and appropriate.
Moreover, there is a limited pool of nurses available to staff the specialized functions of an open heart surgery program or a CCU incident thereto. The nursing staff which works in these units is made up of specially trained individuals critical to the success of the program and it is generally difficult to recruit this caliber of nurse. In the event an additional facility, Petitioner, is authorized to establish its own separate program, it will have a substantial adverse impact on the staff situation at the existing facilities, and if basic economic principles apply, could result in an increase in nursing costs and a related increase in health care charges.
Another factor to be considered is the potential for loss of patients at Bayfront/All Children's if the St. Anthony's operation is begun. One witness estimates a 42 percent (110 adult procedure) loss to Bayfront/All Children's based on the reasonable assumption that several of the cardiologists on staff at St. Anthony's, who currently refer patients to the group performing open heart surgery at All Children's, would begin to refer their patients to the "in house" capability at St. Anthony's where the surgery, now being performed at All Children's, would henceforth be accomplished. It is reasonable to expect that a
substantial, if not 42 percent, loss will occur, and taken together, the loss of referrals and the loss of staff to St. Anthony's by the opening of that program would have a substantial adverse impact on the open heart surgery program at All Children's/Bayfront.
This potential diminishment in the efficiency and quality of care in the existing open heart surgery program at All Children's/Bayfront, which may come about as the result in the reduction in number of adult patients treated there is not justified in that there is no showing that any group in District V, including the medically indigent, are receiving less than adequate treatment.
Even assuming there 1:3 no need established utilizing the Department's numerical methodology, an applicant can successfully apply for a certificate of need if it shows there are "not normal" circumstances justifying award of the certificate. It has long been the Department's position that these "not normal" circumstances be raised by the applicant in the application prior to the completeness deadline in order for them to be legitimately heard, considered, and resolved at hearing. Review of the application submitted by St. Anthony's in this case fails to reveal that the applicant alleged or demonstrated any "not normal" circumstances and even that which might be so considered, the out- migration theory previously discussed herein, was not raised in the application, but only in the testimony of St. Anthony's expert at the hearing.
Petitioner has shown no problems regarding financial accessibility nor has it shown that any identifiable subgroup within the district is having difficulty obtaining open heart services. Indigent patients are being served effectively and it was demonstrated that, as currently constituted, All Children's and Bayfront both provide a higher percentage of indigent care than does applicant, St. Anthony's. Assuming approval of St. Anthony's application, there is no indication it will increase its percentage of indigent care in the open heart surgery area above that which it already provides in the other services offered.
Rule 10-5.011(f)4(a), FACE requires access to open heart surgery services within two hours for at least 90 percent of the service area population. There is no evidence offered by Petitioner to indicate that this standard is not being met by the existing facilities.
St. Anthony's has not established by competent evidence its ability to recruit and maintain adequate, experienced staff to implement its open heart program if approved though, in reality, this may well be one of the lesser problems involved and, as was stated previously, there was no showing that approval of its program would, by enhancing competition, lower costs for health care services. Quite the contrary, it appears that St. Anthony's program would constitute an unnecessary duplication of a specialized service and would have an adverse impact upon the All Children's/Bayfront program and, possibly, the others within the district.
Petitioner's evidence of prospective charges for open heart surgery, showing it to anticipate lower charges than Largo and Plant, is somewhat irrelevant in that those two facilities are located in an area of the district which does not fall within the primary service area considered here.
Petitioner contends that the Department's approval of a CON for open heart surgery by Humana-Brandon, in District VI, and its approval of a certificate for open heart surgery for Tallahassee Community Hospital, in District III, are inconsistent with its denial of its application in District V.
For a variety of reasons, other than the fact that the districts are different and the conditions dissimilar, there is little inconsistency involved. Granting approval of a CON for open heart surgery to St. Anthony's creates a legitimate concern that approval would cause the currently existing All Children's/Bayfront program to drop well below the 200 annual procedures considered necessary for quality of care. Further, in the Tallahassee area, a "not normal" situation existed which does not exist here. The geographical separation of alternative facilities in the Tallahassee area is substantially different and creates an entirely different picture that which exists in the District V/District VI area.
Taken together, then, it is found that application of the numerical need and ancillary provisions of rule 10-5.011, F.A.C. demonstrates no numerical need for a new program and approval and implementation of St. Anthony's application would likely result in a diminishment, as opposed to enhancement, of the quality of open heart surgery care in the District as well as an increase rather than a decrease in health care costs. Further, it is found that there are no "not normal" circumstances, aliunde the numerical need, to justify approval of Petitioner's application.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this case. Section 120.57(1), Florida Statutes
In a case involving the application for a Certificate of Need, the applicant, here, St. Anthony's, has the burden of demonstrating its entitlement to the certificate. Boca Raton Artificial Kidney Center, Inc., v. Florida Department of Health and Rehabilitative Services, 475 So.2d 260 (Fla 1st DCA 1985); Florida Department of Transportation v. J. W. C. Company, Inc. 396 So.2d 788 (Fla 1st DCA 1981).
Section 381.705, Florida Statutes, and Rule 10-5.011(1)(f), F.A.C., establish the criteria pertinent to this proceeding which must be considered by the approval authority in evaluating the application here. Balsam v. Department of Health and Rehabilitative Services, 486 So.2d 1341 (Fla 1st DCA 1986). In determining whether or not Petitioner should be granted a CON for an open heart surgery program, a balanced consideration of all statutory and rule criteria must be conducted. Department of Health and Rehabilitative Services v. Johnson and Johnson Home Health Care, Inc., 447 So.2d 361 (Fla 1st DCA 1984).
The weight to be accorded each criteria and the balancing of the pertinent criteria will vary depending on the facts and circumstances of each case. Collier Medical Center, Inc., v. Department of Health and Rehabilitative Services, 462 So.2d 83 (Fla 1st DCA 1985); Graham v. Estuary Properties, Inc., 399 So.2d 1374 (Fla 1981).
Careful evaluation of the evidence presented at the hearing and an independent application of the numeric methodology contained in the Department's rule indicates no numeric need exists for an additional open heart surgery program in District V for the planning horizon pertinent hereto.
Petitioner contends in his Proposed Recommended Order that in the Prehearing Stipulation, the parties agreed that Petitioner has demonstrated compliance with Subparagraph 5 of the rule regarding the service quality of the proposed program; with portions of Subparagraph 6, regarding the reasonableness of costs and charges and the financial feasibility thereof; with Subparagraph 3, service availability; Subparagraph 4, service accessibility; Subparagraph 5,
service quality; Subparagraph 6, cost effectiveness; and Subparagraph 7, relationship with Local and State health plans. This is not necessarily an accurate representation, however, The parties stipulated primarily that St. Anthony's proposed program, as it related to equipment and costs thereof, proposed staffing levels and salaries, architectural plans and costs, and total project costs were appropriate and reasonable; that St. Anthony's had the financial ability to finance the project, and that projected revenues and expenses were reasonable.
However, it is appropriate to examine the pertinent statutory and rule criteria and independently determine if these criteria are met.
In Section 381.705(1)(a) through (n), Florida Statutes, the legislature has outlined the review criteria against which applications for proposed new services shall be measured. They include:
The need for health care facilities and services ... being proposed in relation to the applicable district plan and state health plan ....
Petitioner has failed to establish that its proposed service is needed or is consistent with the applicable district and state health plans.
The availability, quality -of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing ...
services ... in the service district
The evidence clearly establishes that with the exception of a possible "doctor preference" scheduling problem, there is no shortage of opportunity for open heart surgery at the All Children's/Bayfront facility and it is sufficient to satisfy the needs of the service district.
The ability of the applicant to provide quality of care' and the applicant's record of providing quality of care.
This was stipulated to by the parties.
The availability and adequacy of other health care facilities and services
... in the service district ... which may serve as alternatives for the ...
services to be provided by the applicant.
The evidence established that the All Children's/Bayfront "Center" program is providing adequate service at a location within two miles of the proposed new program.
Probable economies and improvements In services that may be derived from operation of joint, cooperative, or shared health care resources.
A shared facility is currently operated by All Children's/Bayfront. There is little likelihood that Petitioner would be willing to join with the existing facilities in the operation of a shared program. The proposed program is inconsistent with this criterion.
The need in the service district ... for special equipment and services which are not reasonably and economically accessible in adjoining areas.
Open heart surgery is a specialized procedure requiring specialized equipment and personnel. They are available and economically accessible in the service district and adjoining areas.
The need for research and educational facilities ....
Both All Children's and Bayfront currently participate in training programs with the University of South Florida College of Medicine and there is no showing that additional programs are required.
Not pertinent to this application.
The immediate and long term financial feasibility of the proposal.
The parties have so stipulated.
Not pertinent to this application.
Not pertinent to this application.
(1) Probable impact of the proposed project on the cost of providing the
health services proposed by the applicant ...
The evidence raises a substantial possibility that approval of the proposed application may increase the cost of providing open heart surgery in the service district.
(m) The parties have stipulated to the appropriateness of Petitioner's application as regards these two criteria.
(2)(a) Less costly alternatives to the proposed service are available through the program offered by All Children's/Bayfront.
Not pertinent to this application.
Not pertinent to this application.
There has been no showing that patients will experience serious problems in obtaining inpatient care of the type proposed, in the absence of the proposed new service,
Not pertinent to this application.
In addition to the criteria set forth in the statute, the Department has promulgated certain rules governing the criteria against which applications are to be evaluated. These are found in Section 10-5.011, F.A.C., and include:
(1)(b)1 The need that the population to be served has for the health ...
services proposed to be offered ... and the extent to which all residents of the district ... are likely to have access to those services.
The evidence has established that in accordance with the Department's rule methodology, there is no need within the district for the proposed program.
Not pertinent in light of the above.
The contribution of the proposed service in meeting the health needs of members of ... medically underserved groups, particularly those needs identified in the applicable local health plan and state health plan as deserving of priority.
Since it is shown that no need exists for a new program, approval of the current application would not add significantly to meeting the health needs of members of medically underserved groups.
4a The extent to which medically underserved individuals currently use the applicant's services ....
Not pertinent to this application.
b The performance of the applicant in meeting any applicable federal regulations [requiring - uncompensated care, indigent care, or service to minorities and handicapped].
Applicant's record is reasonable and acceptable. c The extent to which Medicare, Medicaid,
and medically indigent patients are served by the applicant; and
d The extent to which the applicant offers a range of means by which a person will have access to its services.
Evidence indicates that applicant provides a satisfactory and respectable amount of indigent, Medicare, and Medicaid service. However, the applicant's rate is substantially below that provided by either All Children's or Bayfront.
It is also clear, however, that the requirements of Subparagraphs 8 and 11 of the rule are not met, notwithstanding Petitioner's attempt, by its introduction at the hearing; of the testimony of Dr. Kolb, to "update" its application at the hearing.
Because of that evidence, it is necessary to determine how such evidence, which either is at variance with or supersedes the information contained in the application, will be dealt with.
By statute, the Department is charged with the responsibility of initial investigation of and review of CON applications. Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, et al., 483 So.2d 700,708 (Fla 1st DCA 1986). It is a basic axiom that the application may not be changed, updated, or amended after it has been deemed complete. However, case
law has modified this to allow the Hearing Officer or Agency Head to consider relevant evidence of changed economic conditions and other current circumstances external to the application, McDonald v. Department of Banking and Finance, 346 So.2d 569, 584 (Fla 1st DCA 1977), if such evidence is due to changed circumstances beyond the control of the applicant and is relevant to the application. Hialeah Hospital v. HRS, et al., 9 FALR 2363 (May 1st, 1987).
The testimony regarding "out-migration" relied upon by the Petitioner to reinforce its application was not a part of the original application or omissions response. Further, it did not result from any extrinsic circumstances or changed conditions not known or discoverable at the time of application or omissions response, and testimony regarding it did not fall within the parameters of the above cited cases. It is, therefore, considered not pertinent to this evaluation.
As a result, the question of whether Petitioner's proposal merits approval under the terms of the rule and statutory criteria must be evaluated on the basis of the information contained in the application and the omissions response. On that basis, the "actual use rate" must be calculated on the basis of procedures performed within District V as the rule neither mentions nor makes provision for the inclusion of any extrinsic information regarding out or in- migration. In fact, the methodology contained in the rule refers specifically to procedures "in the service area" and there is nothing within the rule or statute from which it may be inferred that the Department, the Hearing Officer, or the applicant can or should be free to apply other, non-defined and non- identified factors.
The application review process established by the Department clearly identifies the criteria against which applications are to be evaluated and the application forms prescribed by the Department refer to the appropriate and applicable statutory and rule criteria.
In substance, the competent evidence of record clearly demonstrates there is no numerical need for a new open-heart surgery program at St. Anthony's. Even if a numerical need were shown, the provisions of Subparagraphs
8 and 11 demonstrate that the requisite number of adult open heart surgery cases is not currently being performed at all existing and approved open heart surgery programs within the service area, and it appears certain from the evidence that if an additional program is approved at St. Anthony's, it will result in a reduction of the number of cases currently being accomplished at All Children's/Bayfront well below the rule required 350.
With regard to petitioners suggestion that the number of cases performed, used in the rule formula, be adjusted by the pediatric portion thereof, the Department has consistently interpreted its rule as it relates to determining need in the methodology to determine the actual use rate by considering the total number of open heart surgeries performed within the District without regard to segregation by adult as opposed to pediatric. This is appropriate and was upheld by Hearing Officer E.J. Davis in St. Mary's Hospital v. HRS, DOAH Case No. 87-2729R, dated November 13, 1987.
Therefore, based on a balanced consideration of all relevant statutory and rule criteria and all properly admitted evidence pertinent to the issues, it is clear that there is no numeric need for a new open heart surgery program at St. Anthony's, that there are no "not normal" conditions existing to justify approval of a program there notwithstanding the lack of numeric need, and that, therefore, Petitioner's application should be denied.
Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore:
RECOMMENDED that the application of St. Anthony's Hospital for approval of a certificate of need to establish and operate an open heart surgery program at its facility in St. Petersburg, Florida be denied.
RECOMMENDED this 22nd day of February, 1989 at Tallahassee, Florida.
ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, FL 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 22nd day of February, 1989.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-0637
The following constitutes my specific rulings pursuant to Section 120.57(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case.
By St. Anthony's Hospital:
Accepted and incorporated herein
Rejected as contra to the weight of the evidence. Accepted in so far as open heart surgery is not done at Bayfront.
Accepted and incorporated herein
Accepted and incorporated herein
Accepted
- 13. Accepted and incorporated herein
14. - 22. Accepted and incorporated herein
23. - 26. Accepted and incorporated herein
Rejected as not proven
Rejected
Rejected
& 31. Accepted and incorporated herein
Rejected
& 34. Accepted and incorporated herein
Last sentence rejected. Balance accepted.
& 37. Accepted
Accepted and incorporated herein
Rejected. There was no showing any patient from St. Anthony's has been harmed by transfer to All Children's nor that patients or their families are dissatisfied.
- 42. Rejected as not supported by evidence of
record.
43. - 47. Accepted and incorporated herein
48. & 49. Accepted
50. & 51. Accepted as to total procedures in District V but rejected as to the conclusion that-all existing providers are performing at a level of more than 350 adult open heart surgeries per year. While Largo and Plant may, All Children's/Bayfront is not.
52. & 53. Accepted
Rejected as not supported by the evidence
Accepted as a cite to the pertinent rule
- 59. Rejected. Out-migration is not a proper factor for consideration under statute or rule
Accepted as to the rule not addressing mixed programs.
- 63. Rejected as not consistent with the rule and proper implementation of the need methodology thereunder.
The conclusion that all existing programs in District
10 are currently operating at more than 350 procedures annually is rejected. All Children's is not.
Accepted
Accepted and incorporated herein
& 68. Rejected. Use of figures attributable to out- migration is not provided for or permitted by the rule.
Accepted and incorporated herein
Accepted
Irrelevant. Even if true, there is no showing of the reason or that petitioner would capture these patients.
Accepted
Accepted
Accepted
& 76. Rejected. Cited provision of application stated "may" indicate, not "did' indicate. In addition, MEDPAR data relates only to Medicare patients and an extrapolation of that figure is not necessarily reliable.
Accepted
Accepted but not considered controlling in that the rule provides time reference for use in the methodology.
Not established
& 81. Accepted 82. Rejected as not supported by any independent evidence of record.
Accepted
- 87. Accepted
88. & 89. Rejected. Bayfront's application was withdrawn.
90. Accepted
By the Department of Health and Rehabilitative Services 1.-18. Accepted and incorporated herein
19. & 20. Accepted and incorporated herein
Accepted and incorporated herein
& 23. Accepted and incorporated herein
24. - 26. Accepted and incorporated herein
27. - 29. Accepted and incorporated herein
30. - 32. Accepted and incorporated herein
33. | & 34. Accepted and incorporated | herein |
35. | Accepted and incorporated herein | |
36. | & 37. Accepted | |
38. | - 40. Accepted and incorporated | herein |
41. | No ruling. Not understood. | |
42. | Accepted and incorporated herein | |
43. | Accepted and incorporated herein | |
44. | Accepted and incorporated herein | |
45. | - 47. Accepted and incorporated | herein |
48. | Accepted | |
49. | - 55. Accepted and incorporated | herein |
56. | Accepted | |
57. | Accepted and incorporated herein | |
58. | & 59. Accepted and incorporated | herein |
60. | & 61. Accepted and incorporated | herein |
62. | Accepted and incorporated herein | |
63. | & 64. Accepted | |
65. | Accepted and incorporated herein | |
66. | Accepted | |
67. | Accepted and incorporated herein | |
68. | Accepted | |
69. | Accepted |
By All Children's Hospital
1. - 3. Accepted and incorporated herein
4. & 5. Accepted
6. & 7. Rejected as a summary of testimony and not a Finding of Fact
8. & 9. Accepted
10. - 19. Accepted and incorporated herein
20. - 22. Accepted and incorporated herein
23. & 24. Accepted and incorporated herein
Accepted
& 27. Accepted and incorporated herein
28. - 30. Accepted and incorporated herein
31. & 32. Accepted
Accepted
Accepted and incorporated herein
& 36. Accepted and incorporated herein By Bayfront Medical Center
1. - 3. Not Findings of Fact
4. - 8. Accepted and incorporated herein
9. & 10. Accepted and incorporated herein
11. & 12. Not Findings of Fact
13. - 49. Accepted and incorporated herein
50. & 51. Accepted and incorporated herein
52. & 53. Accepted and incorporated herein
64. - 56. Accepted and incorporated herein
57. - 68. Accepted and incorporated herein
Accepted and incorporated herein
- 72(c). Accepted and incorporated herein 72(d). Argument, not Finding of Fact
72(e).- 72(1). Accepted and incorporated herein
Not a Finding of Fact
Accepted and incorporated herein
Accepted
& 77. Accepted
Not a Finding of Fact
- 81. Accepted and incorporated herein
Accepted and incorporated herein
- 86. Accepted and incorporated herein
87. & 88. Accepted and incorporated herein
Merely a comment on the evidence
Accepted and incorporated herein
Accepted and incorporated herein
Accepted and incorporated herein
Accepted
& 95. Accepted
Accepted
Accepted and incorporated herein
& 99. Accepted
100. Accepted.
COPIES FURNISHED:
Ivan Wood, Esquire
Wood, Lusksinger & Epstein Four Houston Center
1221 Lamar, Suite 1400
Houston, Texas 77010
John H. Parker, Jr., Esquire Hudson, Rainer & Dobbs
1200 Carnegie Building
133 Carnegie Way Atlanta, Georgia 30303
Steven M. Presnell, Esquire Lee Elzie, Esquire MacFarlane, Ferguson, Allison
and Kelly
804 First Florida Bank Building Tallahassee, Florida 32301
Gerald B. Sternstein, Esquire
H. Darrell White, Jr., Esquire McFarlain, Sternstein, Wiley
and Cassedy, P.A.
600 First Florida Bank Building Tallahassee, Florida 32301
Michael J. Cherniga, Esquire Roberts, Baggett, LaFace & Richard
101 East College Avenue Tallahassee, Florida 32301
Gregory L. Coler, Secretary Department of Health and
Rehabilitative Services 1323 Winewood Blvd.
Tallahassee, Florida 32399-0700
R. S. Power, Agency Clerk Department of Health and
Rehabilitative Services 1323 Winewood Blvd.
Tallahassee, Florida 32399-0700
| Issue Date | Proceedings |
|---|---|
| Feb. 22, 1989 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Mar. 31, 1989 | Agency Final Order | |
| Feb. 22, 1989 | Recommended Order | No need shown either under rule method or by other circumstances for open heart surgery program and application should be denied |
