Judges: ROBERT E. MEALE
Agency: Agency for Health Care Administration
Latest Update: Apr. 18, 1989
Summary: No Certificate Of Need when letter of intent signed by board of corporation parent of applicant and financial statement of division of applicant
88-4364.PDFSTATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
ST. JOSEPH'S HOSPITAL,
Petitioner,
vs. | ) ) ) ) ) |
|
DEPARTMENT OF HEALTH AND | ) CASE | NOS. 88-4364 |
REHABILITATIVE SERVICES, | ) | 88-4365 |
Respondent, | ) ) | 88-4366 |
and
HUMHOSCO, INC., d/b/a HUMANA | ) ) ) |
|
HOSPITAL BRANDON,
Intervenor. | ) ) ) |
|
)
)
RECOMMENDED ORDER
Pursuant to notice, final hearing in the above-styled case was held on November 3-4, 7-8, and 22, 1988, in Tallahassee, Florida, before Robert E. Meale, Hearing Officer of the Division of Administrative Hearings.
The representatives of the parties were as follows: For St. Joseph's Hospital:
Ivan Wood, Esquire
Wood, Lucksinger & Epstein Four Houston Center
1221 Lamar, Suite 1440
Houston, Texas 77010-3015
For Hillsborough County Hospital Authority (Tampa General):
John Radey, Esquire Elizabeth McArthur, Esquire Aurell, Fons, Radey & Hinkle Post Office Drawer 11307 Tallahassee, Florida 32302
For University Community Hospital:
Cynthia S. Tunnicliff, Esquire Carlton, Fields, Ward, Emmanuel, Smith and Cutler, P.A.
Post Office Drawer 190 Tallahassee, Florida 32302
For Department of Health and Rehabilitative Services:
John Rodriguez, Esquire Assistant General Counsel 2727 Mahan Drive
Fort Knox Executive Center Tallahassee, Florida 32308
For Humhosco, Inc., d/b/a Humana Hospital Brandon:
James C. Hauser, Esquire Joy Thomas, Esquire
Messer, Vickers, Caparello, French and Madsen, P.A. Post Office Box 1876
Tallahassee, Florida 32302-1876 BACKGROUND
On February 26, 1988, Humhosco, Inc., d/b/a Humana Hospital Brandon (Humhosco) submitted to the Department of Health and Rehabilitative Services (HRS) a letter of intent to file an application for a certificate of need to install and operate an open heart facility at Humana Hospital Brandon. On March 14, 1988, Humhosco submitted to HRS an application for the certificate of need. On July 11, 1988, HRS issued its notice of intent to issue Certificate of Need 5537 for the proposed project.
St. Joseph's Hospital (St. Joseph's), University Community Hospital, and Hillsborough County Hospital Authority (Tampa General) each filed a Petition for Formal Administrative Hearing with respect to the intent to award a certificate of need to Humhosco. The three cases were consolidated.
St. Joseph's, Tampa General, and University Community requested unsuccessfully on more than one occasion a continuance of the final hearing. At the hearing, University Community Hospital voluntarily dismissed its petition.
Humhosco offered into evidence 52 exhibits, including prefiled and deposition testimony. HRS offered into evidence two exhibits, including prefiled testimony. Tampa General offered into evidence 25 exhibits, including prefiled and deposition testimony. St. Joseph's offered into evidence no exhibits. All exhibits were admitted except Humhosco Exhibits 2, 48, and 63, which were proffered.
Each party filed a proposed recommended order. Treatment of the proposed findings is detailed in the Appendix.
FINDINGS OF FACT
Application Process
Humhosco is a wholly owned subsidiary of Humana, Inc. Humhosco owns Humana Hospital Brandon and other hospitals in Florida. The record does not disclose thee number of such hospitals or whether Humhosco owns other assets.
On February 26, 1988, Humhosco submitted to HRS a letter of intent to apply for a certificate of need for open heart services at Humana Hospital Brandon.
The letter of intent included a certificate dated February 26, 1988, authorizing Humhosco to file the application for the project estimated to cost nearly $2 million, making available "sufficient funds" for the project, certifying that Humhosco shall accomplish the project within the time allowable by law at or below the costs stated in the application, and certifying that Humhosco shall license and operate the facility.
The certificate was signed by Alice F. Newton, as Secretary of Humana, Inc. She certified that the representations contained in the preceding paragraph were resolutions of the Board of Directors of Humana, Inc. approved on February 26, 1989.
On or about March 14, 1988, Humhosco submitted to HRS an application for a certificate of need to install and operate an open heart center at Humana Hospital Brandon. The projected cost was about $1.9 million.
The application included a certificate dated March 16, 1988, containing resolutions similar to those contained in the certificate of February 26, 1988. The certificate was again signed by Alice F. Newton, but this time in her capacity as Secretary of Humhosco. The resolutions, which were dated as of March 16, 1988, were adopted by the Board of Directors of Humhosco.
The application contained no financial statement of Humhosco. Instead, the application contained an audited financial statement for "Humana Hospital- Brandon (a division of Humhosco, Inc., a wholly-owned subsidiary of Humana Inc.)." The financial statement, which was for fiscal year ending August 31, 1987, reflected an examination of the financial records of Humana Hospital Brandon, not Humhosco.
The financial statement disclosed a shareholder's equity of about $24 million and net income of about $6.2 million based on net revenues of about $47 million and income before income taxes of about $12.2 million. The record does not explain the basis for a shareholder's equity in a division of the corporation in which it owns shares. However, nothing in the record suggests that the financial statement is mislabelled. The financial statement appears to reflect the operations and net worth of a division of Humhosco, not Humhosco itself.
The financial statement is of little value in assessing the financial condition of Humhosco. Nothing in the record supports an inference that Humhosco's other hospitals, as well as any other operating assets that Humhosco might own, are profitable or, if unprofitable, whether their losses are exceeded by the profits of Humana Hospital Brandon.
By letter dated April 14, 1988, HRS requested additional information from Humhosco. The letter requested, among other things, a financial statement for the prior year and an original certificate rather than a copy. HRS never commented on the fact that the certificate accompanying the letter of intent evidenced resolutions from the corporate parent of the applicant or that the financial statements were of a division of the applicant.
By letter dated May 12, 1988, Humhosco responded to the above- described omissions letter. In its response, Humhosco provided the earlier financial statement, which was for Humana Hospital Brandon and not Humhosco. The letter did not include any material information regarding either certificate.
By letter dated July 11, 1988, HRS informed Humhosco of its intent to issue Certificate of Need 5537 for the establishment of the open heart program described in the application. The accompanying State Agency Action Report, which was dated July 8, 1988, recommended that the certificate of need be issued in its entirety. The report stated that the need methodology described by Rule 10-5.011(1)(f) justified seven open heart programs in District VI, which has only six such programs, and the Humhosco proposal was in substantial compliance with all criteria.
The Hospital
Humana Hospital Brandon is a 220-bed general hospital in Brandon, which is in eastern Hillsborough County. Humana Hospital Brand on is fully accredited by the Joint Commission of the Accreditation of Health Care Organizations.
The hospital, which is a Level II trauma center with eastern Hillsborough County as its catchment area, contains 16 intensive-care and cardiac-care beds and 35 progressive-care beds, in addition to its regular medical-surgery beds.
The hospital offers a wide range of services, including medicine, pathology, anesthesiology, radiology, neurology, intensive care, and emergency care available at all times for cardiac emergencies. The hospital provides cardiac catheterization services through its cardiac catheterization lab and noninvasive cardiographics lab.
Open heart surgery is cardiac surgery during which a cardiopulmonary bypass procedure is used. Cardiac catheterization is a diagnostic/therapeutic procedure used in connection with heart and circulatory conditions. Coronary angioplasty is the expansion of narrowed segments of the coronary vessels.
The proposed open heart suite would be adjacent to the existing cardiac catheterization lab, and the two facilities would share the same recovery/support area.
The proposed program would provide a wide range of procedures, including the repair or replacement of heart valves, repair of congenital heart defects, cardiac revascularization, repair or reconstruction of intrathoracic vessels, and the treatment of cardiac truama. The program would have the ability to implement and apply circulatory assist devices such as the intra- aortic balloon assist and prolonged cardiopulmonary partial bypass.
Need
District and State Health Plans
The 1985 District VI Health Plan reports that most cardiac surgeries are open heart with the most common of these being coronary bypass surgery. The plan acknowledges that an important use of cardiac catheterization is evaluation for open heart surgery.
According to the plan, open heart surgery, particularly coronary bypass surgery, has been controversial with respect to its risk- and cost- effectiveness and the fairness of its distribution among the entire population. Noting a decline in procedures in District VI from 1983 to 1984, the plan
concluded that the application of the present rule methodology could exaggerate need if the decline continued.
Otherwise, however, the proposed program satisfied the policies of the district plan broadly relating to need.
The State Health Plan stated that an inverse relationship exists between the volume of open heart procedures and surgical death rates. The state plan added, however, that no clear agreement exists as to the minimum number of procedures necessary to maintain staff skills. The plan endorsed the rule requiring that a new program project a minimum of 200 procedures annually within three years of opening.
The State Health Plan reported the controversy concerning the efficacy of open heart procedures, at least at their current rate. The plan concluded that further study would be required before the issue could be resolved.
The plan stated that new types of cardiac catheterization procedures may replace some open heart surgery, "while necessitating the availability of open heart programs on standby basis within the same facility." The plan also anticipated a reduction in the rate of open heart surgery with the introduction of new procedures, such as balloon angioplasty, clot-dissolving substances, and calcium blockers.
The plan noted the recommendations of two groups that cardiac catheterization laboratories be located only in facilities providing open heart surgery. The plan suggested that catheterization laboratories without connected open heart programs would suffer lower utilization rates than catheterization laboratories with open heart programs.
The State Health Plan concluded by establishing an objective "to maintain an average of 350 open heart surgery procedures per program in each district through 1990."
HRS Rules
Rule 10-5.011(1)(f), Florida Administrative Code, sets forth the HRS numeric need methodology. Rule 10-5.011(1)(f)8 provides a formula to estimate the number of open heart procedures for the horizon year, which, in this case, is 1990. Rule 10-5.011(1)(f)11 prohibits the approval of new open heart programs unless certain conditions are met, including satisfying the requirement of Rule 10-5.011(1)(f)5.d that 200 procedures annually be performed within three years after commencement of the service.
The proposed open heart program would generate a minimum of 200 adult open heart procedures annually within three years after commencement. Ultimately, the program could handle as many as 500 procedures annually.
Under the formula contained in Rule 10-5.011(1)(f)8, the estimated number of open heart procedures in District VI is 2555 in 1990, which is when the proposed program would become operational.
The projected population of District VI on January 1, 1990, is 1,563,354 persons. For the 12-month period ending two months prior to the deadline for letters of intent for the subject batching cycle, the use rate per 100,000 persons in District VI was 163.45. This figure is based on a population of 1,469,572 persons residing in District VI as of July 1, 1987, and 2402 open
heart procedures performed during calendar year 1987. (The number of procedures includes 1050 procedures performed at Tampa General for the one-year period ending September 30, 1987, rather than calendar year 1987.)
Rule 10-5.001(1)(f)11.b requires that the projected number of procedures in 1990 be divided by 350 in order to generate the number of programs needed to exist in 1990. The result of this calculation is that seven open heart programs are needed in District VI. That means that there is a net need for one program because there are presently six existing and approved open heart programs in District VI.
However, Rule 10-5.011(1)(f)11.a.I prohibits the approval of any new open heart programs unless "each existing and approved" program is "operating at" and "expected to continue to operate at" a minimum of 350 adult open heart cases annually. The meaning of this rule is unclear, and HRS apparently interprets it merely to require that all existing programs average 350 procedures annually at the time of determination of the actual use rate.
Another interpretation of the rule is that each existing and each approved program must be operating at the requisite rate before new programs could be approved. This interpretation is impractical because approved programs that are not yet in operation are not operating at any rate. If the intent of the rule were to prohibit the establishment of more than one open heart program at a time, HRS could have simply stated as much.
The most likely interpretation is one that addresses the universally recognized relationship between volume of open heart procedures (up to a certain level) and patient mortality. The rule requires that each existing and approved facility in the district be operating at 350 procedures annually before new open heart programs are licensed. The rule does not authorize averaging the total number of procedures among the licensed facilities in a district.
The inverse relationship between the number of procedures and surgical deaths is not dependent upon an average number of procedures performed in a geographical area. The safety of an open heart patient is dependent upon the actual number of open heart procedures being performed at the hospital that he or she has selected for open heart surgery. The presence in District VI of a hospital performing 1400 open heart procedures annually is of no relevance to the patient who has unwittingly selected a hospital in the same district that performs only, say, 50 such procedures annually.
The six existing and approved open heart programs in District VI are identified below by facility, location, and numbers of procedures in 1987 and the first six months of 1988.
Facility County 1987/1988 Procedures
Tampa General Hillsborough 1050/714 St. Joseph's Hillsborough 887/514
University Community Hillsborough 0/0 Manatee Memorial Manatee 0/70
L. W. Blake Manatee 0/0 Lakeland Regional Polk 465/292
TOTAL DISTRICT VI PROCEDURES--1987 2402/1590
The 1988 procedures for Manatee Memorial cover the period of February, when the program became operational, through June.
The State Agency Action Report indicates that Manatee Memorial is an approved but not yet existing program, although the program had already accounted for 70 procedures by the time of the report. The reason for this apparent discrepancy is that HRS uses the 1987 data used for calculating the use rate when determining the status of other programs.
HRS offered little explanation of why it used 1987 data for determining in 1988 whether other programs were existing. Rule 10-5.011(1)(f), Florida Administrative Code, which covers open heart programs, does not define "approved and existing programs" or establish the time at which the status of a program should be determined. However, given the critical role of patient safety in the licensing process, the rule does not justify the reference to obsolete data.
The Manatee Memorial open heart program was existing and approved at the time of the letter of intent and application of Humhosco and the State Agency Action Report. It was not then operating at 350 open heart procedures annually. Its approximate annualized rate of 168 procedures is materially below even the annual rate of 200 procedures often cited as the minimum number at which the mortality rate levels out. Additionally, there was no evidence that Manatee Memorial would attain such a volume of open heart procedures.
Conclusions Regarding Need
According to the numeric need methodology, exclusive of Rule 10- 5.011(1)(f)11.a.I, District VI could support an additional open heart program. Although in the long run the rate of open heart procedures may decrease for the reasons set forth above, the rate of such procedures will probably increase at least through 1990 and probably several years thereafter. For reasons set forth elsewhere in this recommended order, the Humana Hospital Brandon program would successfully satisfy this need.
However, the requirement of Rule 10-5.011(1)(f)11.a.I has not been met, and thus need under the rule does not exist. Of the six current open heart programs in District VI, three performed no procedures in 1987. During the first six months of 1988, one of these three programs became operational, but the other two had yet to perform their first procedure. Although the first-year rate of procedures at Manatee Memorial was not insubstantial, the program is not operating at and expected to continue to operate at the minimum annual rate of
350 procedures set forth in the rule. The likelihood of the Manatee Memorial program attaining such a rate is especially difficult to predict in view of the unknown consequences of the initiation of another open heart program in Manatee County and another elsewhere in District VI.
On balance, the proposed program at Humana Hospital Brandon is not needed or authorized due to the existing volume of procedures at Manatee Memorial as of the time of the application and approval and the adverse effect of reduced volumes upon patient safety. Rule 10-5.011(1)(f)11.a.I makes it clear that District VI needs time to absorb the recently approved open heart programs before a new one should be established.
Quality of Care
Humhosco has the ability to provide high quality of care and has done so in the past.
An open heart program at Humana Hospital Brandon would improve the quality of care at the hospital.
The new program would have limited effect upon the hospital's trauma services due to the limited number of trauma-related open heart procedures. However, the new program would complement the cardiac catheterization lab at the hospital.
The addition of an open heart program would permit Humhosco to add cardiac angioplasty services in the cardiac catheterization lab at the hospital. Continuity of care and patient safety and convenience would be enhanced by the establishment of an open heart program at Humana Hospital Brandon.
Strong physician support exists for an open heart program at Humana Hospital Brandon. Many existing staff persons already have the necessary skills and experience to participate in the open heart program. The staff includes 10 cardiovascular surgeons certified by the Medical Board of Thoracic Surgery or board-eligible for certification and three board-certified or board-eligible anesthesiologists trained in open heart surgery. Humhosco would add the additional staff needed to operate the proposed program.
Humana Hospital Brandon has the capacity to accommodate the projected patient volume from the open heart program.
Service Accessiblity
Rule 10-5.011(1)(f)4.a provides that open heart programs shall be available within a maximum automobile travel time of two hours under average conditions for at least 90% of the district's population. The two-hour standard reflects the fact that open heart surgery is a tertiary service that is ordinarily performed on a scheduled rather than emergency basis.
Hillsborough County is the largest county within District VI. The growth rate of eastern Hillsborough is higher than the growth rate of the remainder of the county.
No open heart program is presently located in eastern Hillsborough County. A program at Humana Hospital Brandon would reduce the travel time for the persons living in eastern Hillsborough County. However, the two-hour standard is presently met in District VI, and the improvement in geographical access resulting from the establishment of a program at Humana Hospital Brandon is not substantial.
The proposed program would satisfy the requirements of Rule 10- 5.011(1)(f)4.b and c regarding hours of operation and waiting periods.
Humhosco has projected for the open heart program a payor mix of 55% Medicare, 2% Medicaid, and 5% indigent. If these projections were realized, Humhosco would achieve the objective of making open heart surgery available to these classifications of patients. Humhosco's record of serving these patient classifications at Humana Hospital Brandon suggests that these projected goals would be achieved.
Financial Feasibility
The immediate financial feasibility of the proposed project is good. The source of construction funds is a reasonable mix of 25% equity and 75% debt. The borrowed funds will come from Humana, Inc., which has ample resources to make a loan of this magnitude. The terms are 10 years at 12% with 120 equal monthly payments of $20,575.89 principal and interest.
The availability of the equity portion of construction costs, which amounts to a little over $475,000, is uncertain due to the lack of information concerning the financial condition of the applicant. It is unlikely, however, that the unavailability of any or all of these funds would interfere with the project. Humana, Inc. has in any event committed by resolution to make available to the applicant sufficient funds to accomplish the project.
The long-term financial feasibility of the proposed project is good. Even after total interest payments of about $168,000 and $158,000 in the first two years of operation, Humhosco projects, based on reasonable assumptions, that the open heart program would produce after-tax income of about $250,000 on
first-year gross revenues of about $6.2 million and $345,000 on second-year gross revenues of about $7 million.
Cost Effectiveness
The implementation of an open heart program at Humana Hospital Brandon would encourage competition among health care providers of open heart services.
Humhosco projects the average charge per open heart admission when the program would open in 1990 to be $29,000. This figure is about $3600 less than the average charge per open heart admission at Tampa General in 1987 and compares favorably with the charges of other providers in the area.
In the long term, the effect of an open heart program at Humana Hospital Brandon could have an adverse effect on cost effectiveness if the program at Tampa General lost substantial volume due to the presence of this competition. Tampa General is a major provider of medical services to the medically indigent. Although publicly supported, Tampa General expends more on indigent-related costs than it receives in public funds for the medically indigent. Tampa General therefore must subsidize its unreimbursed indigent services with revenues from paying patients. In 1980, after a period of serious financial strains, Tampa General commenced a modernization program to attract paying patients. The program, together with a $160 million bond issue and new marketing efforts, has significantly improved the financial condition of the hospital.
The approval in the past of new open heart programs in the area has coincided with the reduction of open heart procedures at Tampa General. In fiscal year ending 1983, Tampa General performed 1671 procedures. The following year, during which St. Joseph's began performing open heart surgery, Tampa General performed 878 procedures. In fiscal year ending 1985, Tampa General performed 802 procedures. The following two years, during which no new programs became operational, Tampa General performed 1050 and 1428 (projected) procedures, respectively.
Undoubtedly, a new open heart program at Humana Hospital Brandon would have some effect on existing programs, including that at Tampa General.
However, the record does not support a finding that the establishment of an open heart program at Humana Hospital Brandon would have a more lasting effect upon the program at Tampa General than did the other programs established in recent years.
Other Factors
The record does not demonstrate that there are less costly, more efficient, or more appropriate alternatives to the in-patient services proposed in the subject application.
With one exception, existing in-patient facilities providing open heart services are being used in an appropriate and efficient manner. The exception is that there is nothing in the record to suggest that the open heart programs at Manatee Memorial, University Community, and L. W. Blake are being utilized efficiently. To the contrary, the only program in existence at the time of the application was not operating at the optimal minimum level.
The costs and methods of proposed construction are reasonable and appropriate. There is nothing in the record to suggest that practical alternatives exist to the construction program contemplated by Humhosco.
Open heart patients will not experience serious problems in obtaining in-patient care if the proposed application is not approved.
There is nothing in the record to suggest that joint, cooperative, or shared resources could be used to provide the open heart services for which Humhosco has applied.
The proposed program would not have any significant effect on research and educational facilities or health professional training programs.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties. Section 120.57(1), Florida Statutes.
Humhosco must prove its entitlement to the certificate of need for which it has applied by a preponderance of the evidence. Florida Department of Transportation v. J. W. C. Company, Inc., 396 So.2d 778 (Fla. 1st DCA 1981).
It is well settled that, in deciding whether to issue a certificate of need, HRS must weigh all of the criteria under the relevant statutes and rules. See, e.g., Balsam v. Department of Health and Rehabilitative Services, 486 So.2d 1341 (Fla. 1st DCA 1986). It is equally clear that the standard of judicial review of final orders from HRS is whether the decision is arbitrary, capricious, or in compliance with Sections 381.701-381.715, Florida Statutes. Section 381.709(6)(b), Florida Statutes.
The Balsam case and similar case law pertain to the proper consideration of the various statutory and regulatory criteria, such as need, financial accessibility, and quality of care. Other provisions of Sections 381.701-381.715, with which HRS is also obligated to comply, represent separate requirements excluded from the various statutory and regulatory criteria that HRS must balance in reviewing applications.
Section 381.709(2) describes the requirement of a letter of intent. Section 381.709(2)(c) requires that the letter of intent contain a description of the proposed project and a certified copy of a resolution of the board of directors of the applicant authorizing several specified actions. The letter of intent submitted by Humhosco failed to satisfy this requirement, although the required certificate accompanied the application filed two weeks later.
Section 381.707 is devoted entirely to setting forth the required contents of the application for a certificate of need. Section 381.707(3) requires two years' audited financial statements of the applicant. Humhosco submitted financial statements of one of its divisions and never submitted a financial statement for itself. This omission is material because Humhosco owns other hospitals whose financial condition is undisclosed.
The above-cited provisions set forth unconditional requirements that the legislature has seen fit to impose upon applicants and HRS. In contrast to other sections of the law, the legislature did not leave to the agency's discretion whether or how to enforce these requirements. These deficiencies alone require the denial of the subject application.
Even if the above-noted deficiencies did not warrant denial, the proposed project, on balance, is not merited after consideration of the various statutory and regulatory criteria. Although the project satisfies many of the applicable criteria, its deficiencies require the denial of the application.
Rule 10-5.011(1)(f)11.a.I prohibits the establishment, under normal circumstances, of additional open heart programs until "each existing and approved" program "is operating at and is expected to continue to operate at" at least 350 procedures annually.
When used to describe beds, the phrase, "existing and approved" has been held to include more than simply those beds already in operation when the application was being considered. Balsam, supra at 1346. In fact, the Balsam court upheld HRS when it rejected such a restrictive interpretation of the phrase. The court also rejected the interpretation of HRS and required a construction that took into account information readily available or actually known to HRS concerning the actual inventory. The Balsam court noted, however, that it was "logically sound" to consider beds not in operation if they could be made available in the event of patient demand, although the necessity of including such beds would be a fact question. Id. at 1346-47.
The meaning of Rule 10-5.011(1)(f)11.a.I is not entirely clear. It is not logical to include approved but not yet existing programs because such programs are not operating or expected to continue to operate at any given level. The Balsam decision would seem to suggest that it is necessary to find the most logical construction and application of the rule, given the circumstances of this case.
The most critical factor to consider in interpreting the subject rule is the impact of any construction on patient safety. Up to a certain point, patient mortality improves with volume. The most reasonable construction of the rule would give effect to this important fact. The interpretation proffered by HRS, which averages procedures on a district-wide basis, ignores this fact. Patient safety is not dependent upon any district-wide average, as suggested by HRS' interpretation, but rather on the volume of procedures being performed at the hospital at which an individual patient is undergoing surgery.
It is unnecessary to pursue the meaning of the subject rule beyond its inclusion of programs in existence at the time of the application. In this case, Manatee Memorial had commenced open heart procedures by this time and had not yet attained the minimum number dictated by the rule (350) or even the lesser number suggested by the evidence (200). The presence of two additional approved but not-yet-operating programs militates against the assumption, based on the present record, that the Manatee Memorial program was likely to reach either minimum volume in the near future.
The proper purpose of Rule 10-5.011(1)(f)11.a.I is to allow a district time to absorb newly established programs. The number of open heart programs in District VI has doubled in a short period of time. The establishment of a new program should not be approved until all of the programs are operating at safe levels.
The facts of the case do not support the establishment of an additional program under "not normal" circumstances. Such circumstances require proof that the "existing facilities are (or will be) unavailable or inaccessible, or the quality of care is (or will be) suffering from overutilization, or other evidence of that nature." Humana, Inc. v. Department of Health and Rehabilitative Services, 492 So.2d 388, 392 (Fla. 4th DCA 1986). The evidence suggested the contrary.
RECOMMENDATION
Based on the foregoing, it is
RECOMMENDED that a Final Order be entered dismissing the petition of University Community Hospital in Case No. 88-4366 on the grounds that it dismissed its petition, and denying the application of Humhosco for Certificate of Need 5537.
DONE and ENTERED this 18th day of April, 1989, in Tallahassee, Florida.
ROBERT E. MEALE
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 18th day of April, 1989.
APPENDIX
Treatment Accorded proposed Findings of Humhosco and HRS 1-29. Adopted or adopted in substance.
30. Rejected as against greater weight of the evidence to the extent that
the requirement of 350 procedures at each facility is part of the numeric need methodology.
31 and 33. Adopted in substance. However, the resulting determination of need or no need is tentative. Rule 10-5.011(1)(f)11 provides a general prohibition against the establishment of programs under normal circumstances even though, under the other portions of the rules, there would otherwise be a numeric need.
32. Adopted.
Rejected as legal argument. To the extent factual, rejected as against the greater weight of the evidence.
Adopted in substance.
Rejected as unnecessary.
37-38. Rejected as subordinate.
Adopted in substance at least as to the maintenance or slight increase of the present use rate for the immediate future. This fact does not justify a deviation from the rule requirement of the historic use rate, which in any event would justify another program. Nor does this fact justify a not normal condition for the reasons set forth in the recommended order. It should be noted that Humhosco did not offer evidence to this effect at the hearing for either of these improper purposes. This fact is only relevant in assessing the impact of the establishment of the proposed project upon existing providers, especially Tampa General and, to a lesser extent due to the greater amount of speculation involved, the new providers such as Manatee Memorial.
Rejected as unsupported by the greater weight of the evidence. An increase in the number of programs has historically been accompanied by an increase in the number of procedures. It is conjecture whether or to what degree the addition of programs caused such an increase.
41-45. Adopted in substance.
46-48. Rejected as subordinate.
49-52. Adopted or adopted in substance. 53-55 and 60. Rejected as legal argument.
56-58 and 61. Adopted or adopted in substance.
59. Rejected as recitation of evidence. 62-64. Rejected as subordinate.
65. Rejected as legal argument. 66-69. Adopted.
70 and 72. Rejected as unsupported by the greater weight of the evidence.
71. Rejected as irrelevant.
73-76. Rejected as subordinate. Concerning the "overcrowded" conditions at Tampa General, the evidence showed only that the Tampa General program was, at times, quite busy, but not overutilized. The periodic high level activity at Tampa General is subordinate to the findings in the recommended order concerning the limited impact upon Tampa General of the approval of the proposed project.
77. Adopted in substance.
78-82. Rejected as subordinate.
83. Adopted in substance.
84-86. Rejected -as subordinate.
Rejected as unsupported by the greater weight of the evidence. The proposed payor mix is reasonable insofar as providing access to the medically indigent and Medicaid patients. The record is unclear, however, that the approval of the application would improve the existing access of such patients to open heart services.
Adopted in substance.
89 and 91. Rejected as subordinate.
90. Adopted, except that the last sentence is rejected to the extent that it suggests that Humhosco's commitment to financial access is greater than the commitment of existing providers.
92-94. Adopted.
95-96. Rejected as irrelevant. A hospital has no financial strength. A lender or investor assesses the legal entity that owns or operates the hospital. The net worth and profitability of the hospital may have a material impact on the net worth and profitability of the owner or operator of the hospital.
However, it is impossible to make that determination without assessing the assets, liabilities, profits, and losses of the legal entity and not simply one of its assets. The immediate financial feasibility may be inferred by the activity of Humana, Inc. with respect to the proposed project.
Rejected as legal argument.
Adopted in substance. 99-100 and 108. Adopted.
101-107. Rejected as subordinate and cumulative.
109 and 123. Rejected as legal argument. 111-122. Adopted in substance.
123. Rejected as legal argument.
and 126. Adopted.
and 127-128. Rejected as subordinate.
Adopted in substance.
Rejected as cumulative.
131-133. Rejected as cumulative and, for the purpose offered, irrelevant. 134-137. Adopted in substance.
138-150. Rejected as subordinate.
Treatment of Proposed Findings of Tampa General 1-3. Adopted.
Rejected as legal argument and, as to the policy of HRS, irrelevant insofar as such policy might deviate from the clear requirements of the statute.
First two sentence rejected as legal argument. Remainder adopted.
6-7. Rejected as legal argument except that last sentence of Paragraph 7 is adopted.
First two sentences adopted. Remainder rejected as irrelevant.
Adopted in substance. 10-11. Adopted.
12. Rejected as legal argument and, to the extent factual, against the greater weight of the evidence.
13-14. Adopted in substance.
15-16. Rejected as unnecessary.
17. Rejected as against the greater weight of the evidence. 18-20. Adopted in substance.
Adopted insofar as Humhosco provides quality cardiac care services at Humana Hospital Brandon without an open heart program. Remainder rejected as against the greater weight of the evidence.
Rejected insofar as the proposed finding suggests that a slight improvement in geographic accessibility should, as a matter of law, be ignored in this case. Adopted in substance if, like the proposed finding in Paragraph
19 concerning trauma-center status, this proposed finding means only that the slight improvement in geographic accessibility is alone insufficient to justify granting the certificate of need.
Rejected as subordinate.
24-25. Rejected as recitation of evidence and subordinate.
Rejected as unsupported by the greater weight of the evidence.
Adopted.
28-29. Adopted in substance.
Rejected as irrelevant given the interpretation adopted in the recommended order concerning the meaning of Rule 10-5.011(1)(f)11.a.I.
Adopted in substance.
32-33. Rejected as unsupported by the greater weight of the evidence.
34. Rejected as subordinate.
35-40. Rejected as unsupported by the greater weight of the evidence.
41-42. Rejected as unsupported by the greater weight of the evidence and subordinate.
Treatment Accorded proposed Findings of St. Joseph's 1-4. Adopted or adopted in substance.
First sentence adopted except that the tax status of Humhosco as a
"holding company" is rejected as a legal conclusion, irrelevant, and unsupported by the greater weight of the evidence. Second sentence adopted. Third sentence rejected as irrelevant. Third sentence rejected as a legal conclusion, irrelevant, and unsupported by the greater weight of the evidence, although it appears to be true that the identities of the persons occupying the named positions are the same between the two companies. Last sentence rejected as irrelevant.
Adopted.
Rejected as irrelevant.
Adopted.
Rejected as irrelevant.
10-13. Rejected as legal argument and unnecessary, given the finding in the recommended order that, even ignoring the additional beds that have been approved at Humana Hospital Brandon, the hospital is not overutilized.
14-15 and 17 and 19. Rejected as legal argument.
16. Rejected as subordinate.
18. Adopted in part and rejected in part. The existence of a cardiac catheterization lab does not mandate the authorization of an open heart program. However, the record in this case supports the finding that the addition of an open heart program would complement existing services in the cardiac catheterization lab, and nothing in the law prohibits the consideration of such a factor.
20-21. Rejected as irrelevant. See Paragraph 18 above.
Rejected as irrelevant.
Rejected as legal argument.
Rejected as unsupported by the evidence.
25-26. Rejected as subordinate to the finding contained in the recommended order that the status as a trauma center is not a significant factor in considering the subject application.
27-28. Rejected as legal argument. 29-30. Adopted in substance.
31-33. Rejected as recitation of evidence.
34. Rejected as against the greater weight of the evidence. 35-39. Rejected as subordinate.
40. Adopted in substance.
41-49. Rejected as subordinate.
50. Rejected as irrelevant.
51-52. Rejected as against the greater weight of the evidence. 53-55. Rejected as subordinate.
56. Rejected as legal argument.
57-58. Rejected as recitation of testimony.
Rejected as legal argument.
Adopted.
61-69. Rejected as unnecessary.
Rejected as legal argument.
Adopted except that the last sentence is rejected as legal argument.
Rejected as legal argument.
Rejected as recitation of testimony.
Rejected as legal argument.
Adopted in substance.
76-78. Rejected as recitation of evidence.
COPIES FURNISHED:
Ivan Wood, Esquire Sam Power
Wood, Lucksinger & Epstein Clerk
Four Houston Center Department of Health and
1221 Lamar, Suite 1440 Rehabilitative Services
Houston, TX 77010 1323 Winewood Boulevard
Tallahassee, FL 32399-0700
John Radey, Esquire
Elizabeth McArthur, Esquire Gregory L. Coler Aurell, Fons, Radey & Hinkle Secretary
Post Office Drawer 11307 Department of Health and Tallahassee, FL 32302 Rehabilitative Services
Tallahassee, FL 32399-0700
Cynthia S. Tunnicliff, Esquire Carlton, Fields, Ward, Emmanuel,
Smith & Cutler, P.A. John Miller
Drawer 190 General Counsel
Tallahassee, FL 32302 Department of Health and Rehabilitative Services 1323 Winewood Boulevard
John Rodriguez, Esquire Tallahassee, FL 32399-0700 Assistant General Counsel
2727 Mahan Drive
Fort Knox Executive Center Tallahassee, FL 32308
James C. Hauser, Esquire Joy Thomas, Esquire
Messer, Vickers, Caparello, French and Madsen, P.A. Post Office Box 1876 Tallahassee, FL 32302
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
ST. JOSEPH'S HOSPITAL,
Petitioner,
vs.
CASE NOS.: 88-4364, 88-4365
DEPARTMENT OF HEALTH AND CON NO.: 5537 REHABILITATIVE SERVICES,
Respondent,
and
HUMHOSCO, INC. d/b/a HUMANA HOSPITAL BRANDON,
Intervenor.
/
FINAL ORDER
This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above-styled case submitted a Recommended Order to the Department of Health and Rehabilitative Services (HRS). A copy of that Recommended Order is attached hereto.
RULING ON EXCEPTIONS FILED
BY HUMANA HOSPITAL BRANDON (HUMANA)
Humana excepts to the Hearing Officer's conclusion that Humana's failure to comply with the statutory requirements that a letter of intent contain a certified copy of a resolution of the board of directors and that the application include audited financial statements for two years, requires that the application be denied. Compliance with these statutory requirements is mandatory and is reviewable in a Section 120.57 proceeding wherein the initial decision to grant or deny a CON is challenged. In a 120.57 proceeding there is no presumption of correctness accorded to the initial agency decision. Boca Raton Artificial Kidney Center vs. HRS, 475 So.2d 260 (Fla. 1st DCA 1985). The exceptions are denied.
Humana excepts to the Hearing Officer's conclusion that the department found numeric need on the basis of an incorrect interpretation of Section 10- 5.011(1)(f), F. A. C. The department's interpretation has been sustained in a Section 120.56, Florida Statutes (1987) proceeding. St. Mary's Hospital vs. HRS et al, 9 FALR 6159 (DOAH 11/13/87). I conclude that the department correctly interpreted and applied the rule need methodology. The exceptions are granted.
RULINGS ON EXCEPTIONS
FILED BY TAMPA GENERAL AND ST. JOSEPH
In the first and second exception the petitioners challenge remarks by the Hearing Officer in findings 32 and 33 concerning the application of the need rule. The department properly applied the need rule in this case, and the application of the rule here is consistent with past application of the rule.
Additionally, the petitioners challenge findings of fact 15, 18, 47, 48, 53, 58, and 59 through 61. These findings are supported by competent, substantial evidence; therefore, the exceptions are denied.
In paragraph 6 the petitioners correctly point out that the department may consider available resources in adjoining service districts. It is not necessary to consider the proposed findings regarding the approved open heart surgery program at Bayonet Point because Humana's application should be denied on the basis of its failure to comply with the statutory requirement for the letter of intent and lack of audited financial statements.
FINDINGS OF FACT
The Department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order, except for findings based on conclusions of law inconsistent with this Final Order.
CONCLUSIONS OF LAW
The Department hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order except where inconsistent with this Final Order.
Based upon the foregoing, it is
ADJUDGED, that the application of Humhosco, Inc. d/b/a Humana Hospital Brandon for a certificate of need (CON 5537) to establish an open heart surgery program be DENIED. The petition by University Community Hospital in Case Number 88-4366 is dismissed on the basis of its voluntary dismissal.
DONE and ORDERED this 22nd day of 1989, in Tallahassee, Florida.
Gregory L. Coler Secretary
Department of Health and Rehabilitative Services
by Deputy Secretary for Programs
COPIES FURNISHED:
Ivan Wood, Esquire
WOOD, LUCKSINGER & EPSTEIN
The Park in Houston Center 1221 Lamar, Suite 1400
Houston, Texas 77010-3015
John Radey, Esquire Elizabeth McArthur, Esquire AURELL, FONS, RADEY & HINKLE
Suite 1000, 101 North Monroe Street Post Office Drawer 11307 Tallahassee, FL 32302
Robert D. Meale Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, FL 32399-1550
Cynthia S. Tunnicliff, Esquire CARLTON, FIELDS, WARD, EMMANUEL,
SMITH, CUTLER AND KENT, P. A.
P.O. Drawer 190 Tallahassee, FL 32302
John Rodriguez, Esquire Assistant General Counsel Department of Health and
Rehabilitative Services 2727 Mahan Drive
Fort Knox Executive Center Tallahassee, FL 32308
James C. Hauser, Esquire Joy Thomas, Esquire
MESSER, VICKERS, CAPARELL0, FRENCH & MADSEN
Post Office Box 1876 Tallahassee, FL 32302
FALR
Post Office Box 385 Gainesville, FL 32602
Janie Block (PDDR)
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a copy of the foregoing was sent to the above-named people by U.S. Mail this 27th day of June, 1989.
R. S. Power, Agency Clerk Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407
Tallahassee, Florida 32399-0700 904/488-2381
NOTICE OF RIGHT TO JUDICIAL REVIEW
A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF HRS, AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.
Docket for Case No: 88-004364
Orders for Case No: 88-004364
| Issue Date |
Document |
Summary |
|
Jun. 22, 1989 |
Agency Final Order
|
|
|
Apr. 18, 1989 |
Recommended Order
|
No Certificate Of Need when letter of intent signed by board of corporation parent of applicant and financial statement of division of applicant
|
